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Chief Executive Instructions and Operational Guidelines

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					Chief Executive Instructions
           and
  Operational Guidelines




    This version of the Chief Executive Instructions and Operational Guidline Suite
                               was issued on 5 July 2012
Chief Executive Instructions –
Secretary’s Introduction
The Financial Management and Accountability Act 1997 (FMA Act) provides the central legal
framework for Commonwealth government financial management. The FMA Act is supported by the
Financial Management and Accountability Regulations 1997 (FMA Regulations). These provide the
overarching legislative framework for effective financial management outcomes and outputs within the
public sector.

Section 44 of the FMA Act requires the Chief Executive of each FMA agency to manage the affairs of
the agency in a way that promotes the efficient, effective, economical and ethical use of
Commonwealth resources. Under section 52 of the FMA Act and regulation 6 of the FMA
Regulations, Chief Executives are authorised to give instructions to their agency officials on any
matter relating to the FMA Act and Regulations.

The Department of Finance and Deregulation’s CEIs are issued to augment the FMA legislation in the
areas of financial management and accountability by the department. All officials should ensure that
they are aware of, and adhere to, their obligations under the legislation and those instructions.
Further information can be found in the accompanying Operational Guideline.

Officials who exercise a financial delegation or authorisation granted under the FMA legislation need
to have read and understood all relevant sections of the CEIs and Operational Guidelines when
performing such duties.

The Operational Guidelines reflect better practice management principles. They should be seen as a
key resource for all officials and provide guidance on how to undertake tasks within the department.

At all times, officials should consider the overarching principles of the FMA legislation, apply common
sense principles and ensure that decisions and actions are properly documented in order to meet
accountability requirements.

The CEIs and Operational Guidelines are maintained by Finance’s Procurement Assistance and
Financial Policy Team and are subject to updates from time to time. Officials are encouraged to
continuously access the most current CEI and/or Operational Guidelines available on the Finance
Intranet and Internet.



David Tune PSM
Secretary
Department of Finance and Deregulation
October 2011
CONTENTS

CEI/OG 1 - MANAGING RISK AND INTERNAL ACCOUNTABILITY .................................................................. 1
MANAGING RISK – CHIEF EXECUTIVE INSTRUCTION 1.1 (V2 - 07/2012) ................................................................ 3
PREVENTING FRAUD – CHIEF E XECUTIVE INSTRUCTION 1.2 (V1 – 07/2012) ....................................................... 11
AUDIT - CHIEF EXECUTIVE INSTRUCTION 1.3 (V1 – 07/2012) .............................................................................. 18
ACCOUNTS AND RECORDS - CHIEF EXECUTIVE INSTRUCTION 1.4 (V1 -07/2012) ................................................ 21
INSURANCE - CHIEF EXECUTIVE INSTRUCTION 1.5 (V2 – 07/2012) ...................................................................... 24
CEI/OG 2 - COMMITTING TO SPEND PUBLIC MONEY .................................................................................. 28
APPROVING SPENDING PROPOSALS AND ENTERING INTO ARRANGEMENTS –CHIEF E XECUTIVE INSTRUCTION
2.1 (V2 – 07/2012) .............................................................................................................................................. 31
GUARANTEES , INDEMNITIES , W ARRANTIES AND OTHER CONTINGENT LIABILITIES - CHIEF EXECUTIVE
INSTRUCTION 2.2 (V2 – 07/2012) ........................................................................................................................ 41
OFFICIAL T RAVEL - CHIEF EXECUTIVE INSTRUCTION 2.3 (V3 –07/2012) ............................................................. 47
OFFICIAL HOSPITALITY (INCLUDING ENTERTAINMENT , W ORKING LUNCHES AND GIVING GIFTS ) - CHIEF
E XECUTIVE INSTRUCTION 2.4 (V4 – 07/2012) ..................................................................................................... 60
CEI/OG 3 - PROCUREMENT ............................................................................................................................. 72
PROCUREMENT - CHIEF E XECUTIVE INSTRUCTION 3 (V2 – 07/2012) ................................................................... 72
CEI/OG 4 - GRANTS .......................................................................................................................................... 90
GRANTS - CHIEF E XECUTIVE INSTRUCTION 4 (V1 – 07/2012) .............................................................................. 92
CEI/OG 5 - COMMONWEALTH CREDIT CARDS AND CREDIT VOUCHERS ............................................... 101
COMMONWEALTH CREDIT CARDS AND CREDIT VOUCHERS - CHIEF EXECUTIVE INSTRUCTION 5 (V2 – 07/2012)102
CEI/OG 6 - MAKING PAYMENTS OF PUBLIC MONEY .................................................................................. 110
DRAWING RIGHTS - CHIEF EXECUTIVE INSTRUCTION 6.1 (V1 - 07/2012) .......................................................... 111
MAKING PAYMENTS - CHIEF E XECUTIVE INSTRUCTION 6.2 (V1 – 07/2012) ....................................................... 120
DISCRETIONARY COMPENSATION MECHANISMS - CHIEF E XECUTIVE INSTRUCTION 6.3 (V1 - 07/2012) ............. 129
T AXATION OBLIGATIONS - CHIEF EXECUTIVE INSTRUCTION 6.4 (V1 – 07/2012) ................................................ 138
CEI/OG 7 - MANAGING PUBLIC MONEY ....................................................................................................... 146
RECEIVING PUBLIC MONEY - CHIEF EXECUTIVE INSTRUCTION 7.1 (V1 - 07/2012) ............................................ 147
BANKING – CHIEF EXECUTIVE INSTRUCTION 7.2 (V1 - 07/2012)........................................................................ 150
LOSS AND RECOVERY OF PUBLIC MONEY - CHIEF E XECUTIVE INSTRUCTION 7.3 (V1 - 07/2012) ...................... 156
CASH ADVANCES - CHIEF EXECUTIVE INSTRUCTION 7.4 (V1 - 07/2012) ........................................................... 161
CASH ADVANCES - OPERATIONAL GUIDELINE 7.4 .............................................................................................. 163
INVESTMENTS AND BORROWINGS - CHIEF E XECUTIVE INSTRUCTION 7.5 (V1 - 07/2012) ................................... 167
SPECIAL PUBLIC MONEY - CHIEF EXECUTIVE INSTRUCTION 7.6 (V1 – 07/2012) ............................................... 171
SPECIAL ACCOUNTS - CHIEF E XECUTIVE INSTRUCTION 7.7 (V1 – 07/2012) ...................................................... 173
FEES AND CHARGES – CHIEF E XECUTIVE INSTRUCTION 7.8 (V1 – 07/2012) ..................................................... 176
CEI/OG 8 - HANDLING OF PUBLIC MONEY BY PERSONS OUTSIDE OF THE COMMONWEALTH ......... 181
HANDLING OF MONEY BY PERSONS OUTSIDE OF THE COMMONWEALTH – CHIEF E XECUTIVE INSTRUCTION 8 (V1
– 7/2012)........................................................................................................................................................... 183
CEI/OG 9 - MANAGING DEBT ......................................................................................................................... 189
RECOVERY OF DEBTS - CHIEF EXECUTIVE INSTRUCTION 9.1 (V1 – 07/2012) .................................................... 191
NON RECOVERY (W RITE -OFF) OF DEBTS - CHIEF E XECUTIVE INSTRUCTION 9.2 (V1 - 07/2012) ...................... 198
W AIVING DEBTS - CHIEF EXECUTIVE INSTRUCTION 9.3 (V1 - 07/2012) ............................................................. 201
PAYMENT BY INSTALMENTS OR DEFERRAL OF THE T IME FOR PAYMENT – CHIEF EXECUTIVE INSTRUCTION 9.4
(V1 -07/2012) .................................................................................................................................................... 204
CEI/OG 10 - MANAGING PUBLIC PROPERTY ............................................................................................... 209
ACQUIRING PUBLIC PROPERTY (INCORPORATING ACCEPTING GIFTS AND BENEFITS ) - CHIEF EXECUTIVE
INSTRUCTION 10.1 (V1 – 07/2012) .................................................................................................................... 210
DISPOSING OF PUBLIC PROPERTY (INCLUDING GIFTING OF PUBLIC PROPERTY ) - CHIEF EXECUTIVE
INSTRUCTION 10.2 (V1 – 07/2012) .................................................................................................................... 221
CUSTODY AND USE OF PUBLIC PROPERTY - CHIEF E XECUTIVE INSTRUCTION 10.3 (V3 – 07/2012) .................. 231
LOSS AND RECOVERY OF PUBLIC PROPERTY - CHIEF EXECUTIVE INSTRUCTION 10.4 (V1 – 07/2012) .............. 243
CEI 11 - WORKING WITH OTHER COMMONWEALTH AGENCIES .............................................................. 248
W ORKING WITH OTHER COMMONWEALTH AGENCIES - CHIEF EXECUTIVE INSTRUCTION 11 (V1 – 07/2012) ...... 249
GLOSSARY OF TERMS (v2 – 7/2012) ............................................................................................................ 253
CEI/OG 1 - MANAGING RISK AND INTERNAL ACCOUNTABILITY
INTRODUCTION

About this CEI
This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction to
staff members on activities relating to corporate governance, including:
     managing risks;
     preventing fraud;
     audit;
     accounts and records; and
     insurance.

Many of these issues relate to the special responsibilities of Chief Executives under Part 7 of the
FMA Act and are part of the broader governance frameworks established by a Chief Executive to
manage risk and achieve an organisation’s objectives.

What is risk management?
The international standard on risk management (AS/NZS ISO 31000:2009) defines risk management
as “coordinated activities to direct and control an organisation with regard to risk”. Generally, this
means the internal controls and arrangements put in place by a Chief Executive to manage the
uncertainties faced by the agency.

While the FMA Act and Regulations do not explicitly refer to risk or risk management, the principles
of sound risk management underpin the financial management framework and should inform all
financial decisions. For example, key guidance issued under the FMA Regulations, such as the
CPRs and CGGs, identify risk management practices as core principles of procurement and grants
administration. More broadly, Part 7 of the FMA Act places special responsibilities upon Chief
Executives to manage their agency’s affairs in a way that promotes the proper use of
Commonwealth resources. In doing so, a Chief Executive needs to consider risk management as a
means of promoting the efficient, effective, economical and ethical use of Commonwealth resources
in a manner not inconsistent with policies of the Commonwealth.

What is fraud control?
According to the Australian Government’s Fraud Control Guidelines (FCGs), fraud against the
Commonwealth means “dishonestly obtaining a benefit, or causing a loss, by deception or other
means”. Fraud control involves all activities aimed at preventing, detecting, investigating and
responding to fraud. These can include processes such as staff training, appointment of Fraud
Control Officers, and prosecuting offenders.

FMA Regulation 16A provides for the Minister for Home Affairs to issue guidelines (to be called
Fraud Control Guidelines) about the control of fraud, fraud risk assessments, fraud control plans and
reporting of fraud. The Minister for Home Affairs issued an updated version of the FCGs in
March 2011.

The FCGs establish the fraud control framework for the Commonwealth. Within this context,
agencies develop their own practices, plans and procedures. One of the special responsibilities of a
Chief Executive, under section 45 of the FMA Act, is to implement a fraud control plan for their
agency.

Audit
Another special responsibility of a Chief Executive, under section 46 of the FMA Act is to establish
and maintain an audit committee. The audit committee helps the agency to comply with obligations
under the FMA Act, FMA Regulations and the Finance Minister’s Orders and provide a forum for
communication between the Chief Executive, senior managers of the agency and the internal and
external auditors of the agency.
                                                                       Whole of Government Model CEI Provision




                                                   1
Instances of Non Compliance
All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).




                                                  2
MANAGING RISK – CHIEF EXECUTIVE INSTRUCTION 1.1 (V2 - 07/2012)
1.       General
          Accountability and responsibility for an agency’s performance lies with the Chief Executive.
          This includes accountability for the agency’s management of risk. While senior managers
          and the Chief Executive are ultimately accountable for risk management, it is the
          responsibility of all staff members to manage risk.

          INSTRUCTIONS – all staff



                 You must actively manage risks that are part of your day-to-day work by:
                  -                     complying with the agency’s enterprise risk management
                      framework;
                  -                     identifying key risks and responding to them; and
                  -                     reporting key risks.
                                                                         Whole of Government Model CEI Provision


1.1.     Department’s Enterprise Risk Management (ERM) Framework
1.1.1.   The Department’s ERM framework is based on the international standard for managing risk
         (ISO/FDIS 31000: Risk Management) and complemented by:
         (a) a business continuity plan and an emergency response plan;
         (b) control frameworks (including fraud) and quality assurance processes;
         (c) risk and compliance monitoring processes;
         (d) risk management guidance and templates;
         (e) a departmental risk management plan; and
         (f) regular reviews of the risk management framework, including evaluating the Department’s
             compliance with the framework and to ensure it accords with the current risk management
             standards.

2.       Delegations and directions
2.1.1.   While there is no delegation applicable to managing risks, the following responsibilities are
         applicable to certain staff members:

          Position          Responsibility
          All staff                    Actively manage risks that are part of their day-to-day work.
          All SES                      Facilitate, challenge and drive risk management within their
                                Business Group and the Department more generally; and
                              Report as required on risks within their areas of responsibility.
          Audit               Review, monitor and where necessary recommend improvements to
          Committee             risk management processes as defined by the Department’s ‘Audit
                                Committee Charter’.
          Executive           Ensure effective risk management strategy.
          Board               Identify and monitor critical risks and manage them in accordance
                                with the risk management strategy.




                                                    3
Position        Responsibility
Office of the     Support, monitor and report on risk management in the Department,
Chief Audit         including:
Executive
                     - coordination of the risk management framework; and
                     - evaluation and continuous improvement.

Secretary           Promote the Department’s commitment to effective risk management;
                    Determine the Department’s risk tolerance levels; and
                    Accept the Department’s strategic risk profile and endorse the
                     management of significant and critical risks.




                                      4
MANAGING RISK – OPERATIONAL GUIDELINE 1.1

1.       About risk management
1.1.     General
1.1.1.   The international standard on risk management defines risk as ‘the effect of uncertainty on
         objectives’.
1.1.2.   Risk management is a decision making tool which integrates a systematic process to manage
         risks and opportunities. It allows the Department to understand the risks associated with
         creating opportunities and to effectively maximise returns while maintaining the level of risk at
         an acceptable level.
1.1.3.   The management of risk can occur informally as part of day to day activities or as a formal
         part of activities, such as undertaking a project, establishing an arrangement, developing a
         new function, policy or process. At times the completion of a formal (ie: written) risk
         assessment will be mandatory, for example, for procurements at or above the relevant
         threshold (ie. $80,000 (inc GST) for procurements other than construction services and $9
         million (inc GST) for construction services) (CEI 3 – Procurement).

2.       Process guide – Risk management
2.1.1.   The risk management process should be an integral part of management, embedded in the
         culture and practices of the Department, and tailored to business processes.




                                         Establishing the context


                                            Risk assessment

                                            Risk identification

           Communication                                                        Monitoring and
           and consultation                                                        review
                                               Risk analysis



                                              Risk evaluation




                                              Risk treatment




                                                    5
2.2.     Establishing the context
2.2.1.   The management of risks involves making transparent and publicly defensible decisions.
2.2.2.   Staff should establish the context in which risk needs to be addressed, highlighting the
         environment within which these risks and the related opportunities are to be managed.
2.2.3.   In establishing the context of the risk, the following questions should be considered:
          (a) What are the significant factors in the Department’s internal and external environment?
          (b) Who are the stakeholders and what are their objectives and perspectives?
          (c) What is the process, project or activity?
          (d) What are the expected outcomes?
          (e) What are the major strengths, weaknesses, opportunities and threats (SWOT)?
          (f) What are the acceptable levels of risk, clarifying how much can be accepted or retained?

2.3.     Identifying the risks
2.3.1.   In considering what risks may unfold, the following types of questions could be asked:
         (a)    What must go right and what can go wrong?
         (b)    What is the source of the risk? How can it happen?
         (c)    What is the likely impact of each risk?
         (d)    Who is most likely to be affected?
2.3.2.   When identifying risks that need to be managed it is important to understand the source. By
         exploring what can happen, staff can generate a list of events that may affect the
         project/activity/ business unit.

          Possible source          Questions
          Commercial/legal                                   how well do we meet/manage legislative requirements?
          relationships                                      how well do we meet/manage contractual obligations?
          Economic environment                               assess the extent to which the delivery of financial
                                      sustainability is based on a thorough understanding of the market and market
                                      forces.
          Socio-political                                    to what extent would the Department’s reputation be
          environment                 damaged as a result of a poor understanding of its external environment?
          Business performance                               what risks and opportunities exist in achieving the
                                      delivery of departmental outputs?
          Financial                                          what is the level of financial exposure?
                                                             are the Business Groups producing acceptable financial
                                      outcomes?
          Technology                                         what risks exist for the Department with its reliance on
                                      technology in the workplace?
                                                             how will timeliness and quality of our deliverables be
                                      affected by outage of computer systems?
                                                             how high is the continuity risk?
          Occupational health                                how well do we understand the public sector and industry
          and safety environment      requirements?
                                                             how do we apply this knowledge to eliminate or minimise
                                      the risk to the Department?
                                                             how well do we understand the OH&S risks in relation to
                                      the business of the Department?
          Environmental impact                               what would the impact be on the Department if a property
                                      for which we are responsible was involved in a major environmental incident?
          Corporate governance                               what risks exist for the Department, given its presence on
                                      the boards of statutory authorities and Government Business Enterprises?

2.3.3.   Staff members should also consider the possible impact on the following:
         (a) strategic, operational and business planning;



                                                         6
         (b)   worker safety;
         (c)   financial management;
         (d)   asset management;
         (e)   resource planning;
         (f)   projects, purchasing and contract management;
         (g)   ethics, fraud and probity issues;
         (h)   public and general liability;
         (i)   providing indemnities or limiting liability through contracts;
         (j)   security; and
         (k)   emergency response and business continuity management.

2.4.     Assessing the level of risk
2.4.1.   The principal goal in risk assessment is to establish the significance of each risk, so that
         informed decisions can be made on what strategies and resources are needed to mitigate
         those identified risks. This is done by analysing the relationship between the likelihood of
         something occurring and the resultant impact, taking into account the value of any existing
         controls. In analysing the risks, the following questions can be asked:
          (a) On whom will it impact?
          (b) What controls already exist to manage the risks?
          (c) Are those controls active and are they adequate?
2.4.2.   Methods used to assess the level of risk can vary from qualitative to quantitative (and will
         depend on the data and issues-based knowledge at the disposal of those doing the analysis).
2.4.3.   To facilitate analysis and prioritisation, the following measures of likelihood and impact could
         be used:

                                               Likelihood of occurrence
          Likelihood Level                               Likelihood of occurrence
                           The event may only occur under exceptional circumstances. Its probability is estimated
         Remote
                           at less than 5%.
                           The event occasionally occurs under similar circumstances. Its probability is estimated
         Unlikely
                           at 5% to 30%.
                           The event sometimes occurs under similar circumstances. Its probability is estimated at
         Possible
                           30% to 60%.
                           The event often occurs under similar circumstances. Its probability is estimated at 60%
         Likely
                           to 80%.
                           The event frequently occurs under similar circumstances. Its probability is estimated at
         Almost Certain
                           more than 80%.

                                                            Impact
           Consequence
                                                           Departmental Consequence
              Level
                             The event would have minimal impact on noncore business activities. It is unlikely to
         Insignificant       have impact on image or attract media/public/political concern. It would usually be
                             managed by everyday operations.
                             The event would have some impact on business areas in terms of delays, systems and
         Minor               quality. There would be possibility of limited public/political concern. It would usually be
                             managed at middle management level.
                             The event would cause reduced performance such that targets are not met. There would
         Medium              be possibility of limited damage to the Department’s reputation and the event being
                             subject to public/political concern. It could necessitate changes to processes.
                             The event would cause breakdown of key activities leading to reduction in performance
         Major               (e.g. service delays, stakeholder dissatisfaction, legislative/policy breaches). It would be
                             likely to attract significant/extended media coverage, national news interest, independent


                                                           7
                                                                Impact
           Consequence
                                                               Departmental Consequence
              Level
                                 external enquiry and significant public/political concern and questioning. Survival of the
                                 project or activity is threatened.
                                 The event would cause significant impact on the social or economic well-being of the
         Extreme                 nation, or affect Australia’s ability to conduct national defence and ensure national
                                 security.

2.5.     Evaluating and prioritising identified risks
2.5.1.   The level of risk is determined by the combined effect of likelihood and impact. The following
         table provides guidance on the resultant risk following the assessment of likelihood and
         consequence.


                                                    M                H                H                E                E
                               Extreme
               Consequence




                                Major               M                M                H                H                E

                               Medium               L                M                M                H                H

                                Minor               L                L                M                M                H

                             Insignificant          L                L                L                M                M
                                                                                                                    Almost
                                                Remote           Unlikely        Possible           Likely
            Risk Rating Matrix                                                                                      Certain
                                                                                Likelihood

         Extreme             Immediate action required by Executive with detailed planning, allocation of
                             resources and regular monitoring.
         High                Action required. Prioritise resources to complete as soon as possible.

         Medium              No immediate action required but to be scheduled for action as part of project or
                             business plan. Management responsibility must be specified.
         Low                 Managed by routine procedures.


2.5.2.   A part of analysing the risk requires staff members to evaluate and prioritise identified risks.
         This involves making decisions on which risks are important and what priority should be
         assigned to them. What may or may not be an acceptable risk will be influenced by many
         factors, remembering that an acceptable risk need not be an insignificant one.
2.5.3.   Acceptable risks are generally those where the benefits outweigh the inherent risks and/or the
         level of residual risk. Unacceptable risks are generally those where the impact is
         unacceptable or the cost of treating risks outweighs any benefits.

2.6.     Managing risk
2.6.1.   Staff members are required to develop and implement treatment strategies as necessary.
         While it is unlikely that the risks will be entirely eliminated, the likelihood and the severity of
         their impacts can be reduced to a more acceptable level.
2.6.2.   Key questions to consider in managing risk are as follows:
         (a)       What processes or controls are required to effectively manage risks?
         (b)       Is the cost of proposed controls greater than the expected benefits?
         (c)       Have all the feasible options been identified?
         (d)       Has a risk action plan been developed?
         (e)       Who has responsibility for implementing the plan?



                                                               8
2.6.3.   The management options for treating risks generally fall within the following four broad
         categories:

         Category                                                Nature of Treatment
         Reduce the Under this risk management strategy, the aim for the staff member is to reduce the likelihood of the
         risk       identified risk occurring and/or the level of its impact. Useful tools for staff should include
                    management controls, modifying operational procedures, and ensuring policy and procedures are
                    well documented.
         Accept the This approach can often be used by staff members in conjunction with (a) in circumstances where
         risk       the cost of treating the risk far outweighs the expected benefits. A lack of suitable treatment
                    mechanisms, the cost of treating the risk far outweighs the expected benefits or occasions where the
                    apparent opportunities outweigh inherent threats, are other scenarios which may lead staff to an
                    acceptance of identified risks.
         Transfer   The transferring of risk to a group or person that can exercise the most effective controls over the
         the risk   risk, ensuring that principles of fairness and equity for both parties are maintained and that the
                    Department’s interests are protected is permitted to be undertaken by staff members. Staff
                    members may consider insurance as a risk transfer (although all that is transferred is possible
                    financial loss arising from the risk being realised). As transferring risk to contracting parties will often
                    still leave a significant reputational risk, staff need to consider this in the way a contract is managed
                    to mitigate the risk to reputation that still potentially lies with the Department.
         Avoid the Staff members may determine that choosing not to proceed with a project or activity may be the
         risk       most appropriate decision on occasions. Management should recognise that it could unintentionally
                    increase the significance of other risks, or create new risks to the organisation. An important part of
                    this step is for staff to identify the cost-benefit relationship between the risk and the treatment option.
                    This needs to be considered irrespective of the treatment option(s) chosen.

2.7.     Implement the risk management plan
2.7.1.   Following the completion of a risk management plan, it should be implemented and actively
         managed.

2.8.     Managing risk management plans and documentation
2.8.1.   The effectiveness of the plans, strategies and systems established to control the risks should
         be monitored and the overall management of risks should be transparent and publicly
         defensible.
2.8.2.   Throughout the life of an activity, risk management plans should be reviewed and changes
         actioned. This should be documented as required to:
         (a) demonstrate the status quo or identify and address changes in the risk profile;
         (b) provide evidence of a systematic approach to identification and analysis;
         (c) share and communicate the key information;
         (d) develop the organisation’s knowledge database;
         (e) provide the decision makers with a comprehensive risk management plan;
         (f) facilitate continuing monitoring and review; and
         (g) provide an accountability tool.
2.8.3.   Methods of monitoring may include:
         (a) assigning the monitoring of a risk or group of risks to individual staff members;
         (b) reporting to a relevant governance committee;
         (c) a review by the Office of Chief Audit Executive; or
         (d) a review by some other independent body.
2.8.4.   Key questions for staff members to consider in the monitoring and review of risks are as
         follows:
         (a) Are the risk treatments effective in addressing the issues?
         (b) Are the risk treatments efficient and cost effective?
         (c) Are the management controls, including financial controls, adequate?
         (d) How can we improve the process?



                                                              9
3.       Controls
3.1.1.   Risk management is the responsibility of all staff. Controls include:
         (a) hierarchy of delegations;
         (b) generally more than one staff member is involved in decision making, particularly when it
             relates to spending public money;
         (c) mandatory requirements for risk assessments for certain activities such as procurements
             and granting; and
         (d) audits.

4.       Reference topics
4.1.     Key references

          Legislation             Work Health and Safety Act 2011
          CEIs/Operational        2.2 - Guarantees, Indemnities, Warranties and Other Contingent
          Guidelines               Liabilities
          Templates/forms         Simple Risk Assessment Template
                                  Procurement and Probity Risk Assessment template
          Other                   International Risk Management Standard
                                   o AS/NZS ISO 31000:2009 – Risk management – principles and
                                      guidelines (ISO/FDIS 31000: Risk Management)
                                   o ISO/IEC 31010:2009- Risk management – Risk assessment
                                      techniques
                                  Audit Committee Charter
                                  Executive Board Charter
                                  Business Continuity Plan
                                  Emergency Response Plan
                                  Fraud Control Plan
                                  Departmental Enterprise Risk Management Framework
                                  Commonwealth Procurement Rules
                                  Commonwealth Fraud Control Guidelines, 2011
                                  Commonwealth Grant Guidelines - FMG 23
                                  Australian National Audit Office better practice guides
                                   o Public Sector Audit Committees
                                   o Public Sector Governance
                                   o Fraud Control in Australian Government Agencies
                                  Department of Finance and Deregulation
                                   o Better Practice Guide – Risk Management 2008
                                   o Finance Circular 2011/07: Certificate of Compliance – FMA Act
                                      Agencies

4.2.     Key contacts

          Branch               Contact for Advice on
          Office of Chief       Risk management support, workshop facilitation and training.
          Audit Executive       Insurance and the Department’s Comcover policy.
          HR Services           Occupational health and safety arrangements, including Comcare,
          Branch                  for staff.
          Procurement           General terms and conditions of the CEI and Operational
          Assistance and          Guideline.
          Financial Policy      Risk assessment requirements for procurements.
          Team, Financial
          Services Branch




                                                  10
PREVENTING FRAUD – CHIEF EXECUTIVE INSTRUCTION 1.2 (V1 – 07/2012)

1.       General

          INSTRUCTIONS – all staff



                 You must act in accordance with the agency’s fraud control plan.
                 You must act in accordance with the Fraud Control Guidelines when undertaking
                  duties in relation to the control and reporting of fraud.
                                                                          Whole of Government Model CEI Provision




2.       Fraud control guidelines
2.1.1.   In consultation with the Secretary, Executive Board members and the Audit Committee, the
         Chief Audit Executive must develop and implement a Fraud Control Plan for the Department
         which is consistent with the ‘Commonwealth Fraud Control Guidelines'. The Plan is to
         address the mandatory requirements contained in the Guidelines, regardless of whether all or
         parts of the fraud control activities are outsourced.

3.       Responsibilities of staff members
3.1.1.   You:
           (a) are responsible for taking all reasonable measures to prevent, detect and report fraud;
           (b) are to ensure that the Department adopts the principles of natural justice and
               procedural fairness in considering issues;
           (c) should ensure that the Department acts as a model litigant in any legal action or claim;
               and
           (d) should meet the fraud control competency standards and have a minimum level of
               security clearance of ‘Protected' if you are engaged in the formal prevention, detection
               and investigation of fraud.

4.       External providers
4.1.1.   If you are responsible for the management of existing and future contracts with outsourced
         providers, you should ensure that external service providers:
         (a)      do not compromise the Department’s fraud control arrangements; and
         (b)      meet the standards of accountability needed as part of the Commonwealth
                  procurement process.

5.       Delegations and directions
5.1.1.   While there is no delegation applicable to fraud, the following responsibilities are applicable to
         certain staff members:

          Position               Responsibility
          All staff               Are responsible for acting in an ethical manner and taking all
                                    reasonable measures to prevent, detect and report fraud.
          Assistant               Monitor appropriate ethics guidance for staff members.
          Secretary, HR
          Services Branch
          Assistant                  Liaise with the Australian Federal Police and the Director of



                                                    11
Position             Responsibility
Secretary, Legal        Public Prosecutions on matters relating to serious or complex
Services Branch         crime.
Office of Chief       Develop and implement the Department’s ‘Fraud Control Plan’
Audit Executive         including fraud prevention and ethics education programs are in
                        place;
                      Assist Business Groups in carrying out fraud risk assessments;
                      Liaise with the Australian National Audit Office and other relevant
                        agencies to ensure the Department is an exemplar in matters
                        relating to management of fraud;
                      Receive reports of suspected fraud and breaches of the Code of
                        Conduct and service the Audit Committee in respect of these
                        matters;
                      Ensure that the Secretary is appraised on the status of any
                        investigations;
                      Coordinate reporting as required on the Department’s fraud risks
                        and fraud control measures, including the Annual Report,
                        Australian Institute of Criminology’s annual fraud survey etc; and
                      Report financial fraud matters to Financial Operations Branch
                        (FOB) (unless the alleged fraud occurred in FOB).
Financial             Examine and report on matters of financial fraud.
Operations Branch
Deputy Secretaries      Are accountable to the Secretary for managing and responding to
                         fraud risk at both strategic and operational levels within their
                         Business Group; and
                        Reassess fraud risk annually when developing Group Business
                         Plans and provide input to the Department’s Fraud Control and
                         Ethics Plan.
Deputy Secretary,       Determine who will co-ordinate on-going civil and criminal actions
COOG                     arising from investigations, on a case by case basis.
Audit Committee         Review and examine successive updates of the Department’s
                         Fraud Control Plan;
                        In accordance with FMA regulation 22C and the Audit Committee
                         Charter, regularly receive and appropriately action reports on
                         investigation activity across the Department. This includes
                         considering any other supporting or contrary material (except for
                         where the Secretary commissions the investigation and it is
                         agreed that the Secretary is to only be provided with the report);
                         and
                        Review the conclusions of an investigation conducted by OCAE
                         and determine the appropriate course of action (including
                         whether any further investigation is to be taken).
Secretary and           Are authorised to receive and respond to Reports of Breaches of
Deputy Secretaries       the Code of Conduct (including suspected fraudulent activities).




                                       12
PREVENTING FRAUD – OPERATIONAL GUIDELINE 1.2

1.       About fraud
1.1.     General
1.1.1.   Fraud control relates to the protection of public property, revenue, expenditure, rights and
         privileges.
1.1.2.   The ‘Commonwealth Fraud Control Guidelines’ require all FMA agencies to adopt
         comprehensive practices and procedures to prevent and control fraud, even for outsourced
         arrangements. The ‘Australian Public Service (APS) Values’ and ‘APS Code of Conduct’ as
         well as any additional values adopted by the Department are also to be followed by staff
         members.
1.1.3.   All allegations of fraud are to be investigated. Acts of fraudulent conduct should be
         appropriately dealt with either by informal or formal disciplinary action as required (under the
         Public Service Act 1999, FMA or other legislation, and/or by criminal prosecution through the
         Director of Public Prosecutions).

1.2.     Common methods and types of fraud and misconduct
1.2.1.   Fraud against the Commonwealth is defined as ‘dishonestly obtaining a benefit, or causing a
         loss, by deception or other means’. It includes:
         (a)     theft;
         (b)     obtaining property, a financial advantage or any other benefit by deception;
         (c)     causing a loss, or avoiding or creating a liability by deception;
         (d)     providing false or misleading information to the Commonwealth, or failing to provide
                 information where there is an obligation to do so;
         (e)     making, using or possessing forged or falsified documents;
         (f)     bribery, corruption or abuse of public office;
         (g)     unlawful use of Commonwealth computers, vehicles, telephones and other property
                 or services;
         (h)     relevant bankruptcy offences; and
         (i)     any offences of a like-nature.
1.2.2.   Common methods and types of fraudulent activity are:

             accepting or offering bribes                  illegally using copies of records or receipts
             collusive bidding                             forged endorsements
             selling waste and scraps for private          altering amounts or details on documents
              gain                                          over-claiming expenses
             using facsimile signatures                    using imaging and desktop publishing
             running private business with official         technology to produce apparent original
              assets                                         documents
             substituting old goods for new                writing off recoverable assets or debts
             leaving transactions unrecorded               unauthorised transactions
             recording transactions                        selling information
              (expenditure/receipts/deposits) for           issuing cheques to false persons and
              incorrect amounts                              companies
             theft of official purchasing authorities      entering false persons on the payroll.
              such as order books
             stealing or borrowing without authority
              supplies/equipment
             damaging or destroying
              documentation




                                                    13
1.2.3.   Fraud can also constitute misconduct (breaches of the Public Service Act 1999, APS Code of
         Conduct). Accordingly, in addition to any criminal or civil issues associated with fraud, any
         such actions would also be dealt with as a disciplinary matter.

2.       Principles of effective fraud prevention and control
2.1.1.   The following key principles form the basis of effective fraud prevention and control:
         (a)      prevention of fraud;
         (b)      detection and investigation of fraud;
         (c)      prosecution of offenders;
         (d)      application of appropriate civil and disciplinary penalties;
         (e)      recovery of the proceeds of fraudulent activity;
         (f)      training of all staff members in ethics, privacy and fraud awareness;
         (g)      specialised training of staff members involved in fraud control;
         (h)      external scrutiny of fraud control activities; and
         (i)      reporting to Government and accountability to Parliament.


3.       Fraud risk assessment
3.1.1.   In accordance with the requirements of the ‘Commonwealth Fraud Control Guidelines’, a
         ‘Fraud Risk Assessment’ is to be undertaken even two years by the Office of Chief Audit
         Executive (OCAE) to identify areas that are susceptible to fraudulent activity and take action
         to mitigate this or continuously improve current practice. In addition, an assessment should
         be made whenever the Department undergoes a substantial change in structure or function.
3.1.2.   The Department’s ‘Risk Management Framework’ also applies and an assessment should be
         made of how effective the Department’s internal risk management processes are in
         moderating the identified levels of inherent fraud risk.
3.1.3.   These assessments should consider risks that may arise - both internally and externally.
         Consideration should also be given to risks that may emerge in the future, such as if the
         Department determines that it will increase its access to external service providers or adopt
         developments in information technology and communications infrastructure.
3.1.4.   Core areas to be considered in any fraud risk assessment include:
         (a)      information technology and information security;
         (b)      electronic commerce, electronic service delivery and the Internet;
         (c)      outsourced functions;
         (d)      grant and other payments and benefit programs;
         (e)      tendering processes, purchasing and contract management;
         (f)      services provided to the community;
         (g)      revenue collection;
         (h)      use of Government credit cards;
         (i)      travel allowances and other allowances;
         (j)      salaries; and
         (k)      property and other physical assets, including physical security.
3.1.5.   Staff members involved in the assessment process must fully document the process,
         including the criteria used and the reasoning for approaches/decisions. The methodology
         adopted needs to be capable of adequately measuring risks in a comparable way and be
         capable of providing a supporting rating of the risks of fraud.

4.       Fraud Control Plan
4.1.1.   The Department’s Fraud Control Plan is to be utilised by staff members to manage risks
         identified in the course of a staff member’s day-to-day responsibilities. This is a central
         requirement of the ‘Commonwealth Fraud Control Guidelines’.




                                                    14
4.1.2.   The Plan shall take into account risks identified in the ‘Fraud Risk Assessment’. The Plan
         should be readily available to all staff members, with possible redactions where
         sensitive/security issues are present.

5.       Reporting suspected fraud
5.1.1.   All reports are to be treated with discretion, including respect to the privacy and need for
         confidentiality of the reporting staff member’s identity.
5.1.2.   All staff members have a statutory and ethical obligation to report any cases of fraud and
         misconduct, which they reasonably suspect to have been committed, by other staff members,
         external service providers or other third parties.
5.1.3.   Holding a reasonable and impartial suspicion of a dishonest and unlawful act is sufficient
         justification for a staff member to report a matter for investigation. However, reporting
         frivolous, vexatious, or fictitious matters also constitutes misconduct and persons doing so
         may be subject to investigation.
5.1.4.   Staff members should make their report as soon as a reasonable basis exists to support their
         suspicions. Waiting for additional information or making further inquiries may put
         confidentiality at risk or impair the conduct of an investigation that may follow.
5.1.5.   The Department has established arrangements to protect the interests of staff members who
         may wish to report a breach (refer Whistleblowing at sub-item 9.1).
5.1.6.   Staff members should report incidents through their managers to the relevant Deputy
         Secretary.
5.1.7.   Where a staff member feels unable to go through this channel they can:
           (a)     disclose the information to OCAE through the Department’s Ethics Hotline (1800 034
                     651) or by email to the EthicsHotline; or
           (b)     notify an authorised person (the Secretary, a Deputy Secretary, the Agency Security
                     Adviser or the Assistant Secretary HR Services Branch).
5.1.8.   Staff members can report anonymously. However, staff members should be aware that
         conducting an investigation under these circumstances is often difficult. When minimal
         information is provided, it is often difficult to gather the additional information that may be
         required to complete an investigation.
5.1.9.   Any report relating to allegations against the OCAE should be addressed to an authorised
         person (see above).

6.       Investigating and responding to suspected fraud
6.1.1.   The Department shall ensure all instances of suspected fraud are investigated appropriately
         and promptly.
6.1.2.   Senior staff members receiving reports should liaise with OCAE regarding the action to be
         taken.
6.1.3.   OCAE will coordinate or undertake investigations as required.
6.1.4.   Where a matter involves fraud or attempted fraud committed by intrusion into a computer
         system, the Assistant Secretary, IT Services Branch is to be consulted. OCAE may also need
         to report the matter to the Defence Signals Directorate.
6.1.5.   Where a matter involves financial fraud, the Assistant Secretary, Financial Operations Branch
         is to be informed (unless the fraud occurred in that Branch).
6.1.6.   The Australian Federal Police (AFP) has the primary responsibility for investigating serious
         fraud and criminal offences against the Commonwealth. Where a matter may need to be
         referred to the AFP, OCAE in consultation with the Secretary, is to liaise with the Attorney-
         General's Department.

7.       Process - Investigation
7.1.     General




                                                   15
7.1.1.   The methods and processes of investigations are to comply with the ‘Australian Government
         Investigations Standards’. All investigations are to have proper regard to procedural fairness
         (natural justice) and privacy considerations.
7.1.2.   All investigations should proceed in accordance with the ‘need to know’ principle.
7.1.3.   To maintain a consistent and professional standard, suspected fraud or misconduct
         investigations should be conducted in an appropriate manner by a competent and qualified
         investigator (in accordance with the ‘Commonwealth Fraud Control Guidelines’).
7.1.4.   All records obtained and retained in relation to investigations, are subject to the Privacy Act
         1988 and to the Freedom of Information Act 1982.

7.2.     Decisions
7.2.1.   Upon completion of an investigation, the details should be referred to the Secretary for
         direction (if any is required) in terms of criminal, civil or administrative action. Where evidence
         exists to substantiate a criminal charge, the Secretary may refer the matter directly to the
         Director of Public Prosecutions, for consideration.
7.2.2.   OCAE shall ensure that the Secretary and Deputy Secretary, Chief Operating Officer Group is
         kept informed of the status of any investigation and (if required) the actions recommended to
         be taken by the Department to minimise its future occurrence.
7.2.3.   Investigations which find no evidence to substantiate the allegation are to be reported to the
         Audit Committee. The case may then be closed and the file archived.
7.2.4.   Where a subsequent investigation occurs, if there is evidence that the initial report was made
         for mischievous purposes, then the action will be considered a breach of the APS Code of
         Conduct. The matter may be deemed as liable for further investigation.
7.2.5.   Decisions involving the termination of staff can only be made by the Secretary, after receiving
         advice from relevant personnel (eg: the investigating officer, Assistant Secretary, HR Services
         Branch, or the Deputy Secretary, Chief Operating Officer Group).

8.       Controls
8.1.1.   The key controls are:
          (a) a quality assurance review conducted by the AFP on a rolling basis, to ensure that the
              investigations standards of the Commonwealth have been adhered to;
          (b) annual reporting to the Minister on the level of the Department’s compliance with the
              ‘Commonwealth Fraud Control Guidelines’ and ensuring appropriate procedures are in
              place;
          (c) documenting the reasons for whether or not to utilise civil, administrative or disciplinary
              penalties or refer the matter for prosecution;
          (d) reporting information to the Attorney General’s Department (on a fiscal year basis by
              30 September each year) on fraud investigations undertaken by the Department;
          (e) suspicious transactions reporting undertaken by Financial Operations Branch; and
          (f) system and process controls built into financial, HR and other departmental systems.

9.       Reference topics
9.1.     Whistleblowing
9.1.1.   Guidance on the protection of individuals who report breaches (or alleged breaches) of the
         Code of Conduct can be found in the Department’s Whistleblowing Guidelines.

9.2.     External service providers
9.2.1.   Where the Department engages an external service provider, staff members are to ensure
         that the arrangement clearly outlines the responsibilities of the provider and that they are to
         comply with all relevant Commonwealth legislation and policies (including in relation to fraud
         control).




                                                    16
9.3.   Key references

       Legislation           Financial Management and Accountability Act 1997
                             Financial Management and Accountability Regulations 1997
                             Criminal Code Act 1995
                             Privacy Act 1988

                             Privacy Amendment (Private Sector) Act 2000

                             Proceeds of Crime Act 2002

                             Public Service Act 1999
                             Public Service Regulations 1999
       Templates/Forms       Nil.
       Other                 Commonwealth Fraud Control Guidelines, 2011
                             Commonwealth Fraud Investigation Standards Package
                             APS Values and Code of Conduct in Practice Guide to official
                              conduct for APS employees and Agency Heads
                             Fraud control competency standards
                             Prosecution Policy of the Commonwealth
                             Protective Security Policy Framework 2010

9.4.   Key contacts

       Branch             Contact for Advice on
       Office of Chief     Fraud Control Plan.
       Audit Executive     Fraud investigation procedures.
                           Ethics Hotline (1800 034 651) and email.
       HR Services         Whistleblowing.
       Branch              Code of Conduct.
       Procurement         General terms and conditions of the CEI and Operational
       Assistance and        Guideline.
       Financial Policy
       Team, Financial
       Services Branch
       Financial             Financial fraud.
       Operations
       Branch




                                                 17
AUDIT - CHIEF EXECUTIVE INSTRUCTION 1.3 (V1 – 07/2012)

1.       General

          INSTRUCTIONS – all staff

                 You must cooperate with:
                      -   your agency’s internal audit function (if applicable);
                      -   your agency’s audit committee; and
                      −   the Commonwealth’s external auditor.
                                                                        Whole of Government Model CEI Provision


2.       Audit considerations
2.1.     Audit Committee
2.1.1.   In accordance with section 46 of the FMA Act, the Department has established an Audit
         Committee to provide management with a level of objective assurance on the
         appropriateness of internal controls and business risk management.
2.1.2.   The Audit Committee undertakes its role in accordance FMA regulation 22C. Its terms of
         reference, functions and responsibilities are contained in the Department’s Audit Committee
         Charter.
2.1.3.   The Audit Committee shall, in consultation with Business Groups, develop and maintain an
         Internal Audit Plan for the Department. The Audit Committee is supported by the Office of
         Chief Audit Executive (OCAE) in undertaking reviews of departmental operations and
         business practices, with specific reference to internal controls.

2.2.     Engagement of external audit providers
2.2.1.   Audit functions may be undertaken by the Department’s in-house auditors or through the
         engagement of an external service provider. Where the Department enters into an
         arrangement with an external service provider, OCAE will manage the contract on behalf of
         the Department.
2.2.2.   Where you seek to utilise the services of the external provider to conduct an audit, you should
         initially contact OCAE about the method of engagement and contact with the provider. In
         addition, the required level of documentation to be provided to the external service provider is
         to be confirmed.
2.2.3.   OCAE is able to provide advice on work that is not covered by the arrangement with the
         service provider.

2.3.     Auditor General/Australian National Audit Office (ANAO)
2.3.1.   The Auditor-General and the ANAO provides independent assessment and assurance on a
         variety of matters primarily through conducting performance and financial statement audits.
2.3.2.   The Auditor-General may direct a person to provide information, produce documents and/or
         attend and give evidence before the Auditor-General or an authorised official.
2.3.3.   When required, OCAE shall undertake liaison between the Department and the Auditor
         General and ANAO. Staff members should promptly action any request received from OCAE
         in relation to an audit being conducted and any documentation required.




                                                   18
3.       Delegations and directions
3.1.1.   While there is no delegation applicable to audit responsibilities, the following responsibilities
         are applicable to certain staff members:

          Position              Responsibility
          All Staff              Ensure attendance at Audit Committee meeting when requested.
                                 Action requests for documentation and information in relation to
                                   audits being conducted.
          Office of Chief        Oversee the management of internal audit services to the
          Audit Executive          Department.
                                 Regularly review departmental operations and business practices,
                                   identify significant weaknesses and recommend changes to
                                   operational systems and procedures, which would improve
                                   efficiencies.
                                 Oversee liaison with the ANAO in respect of the programs of the
                                   Auditor-General.
                                 Provide secretariat services to the Audit Committee.
                                 Report to the Audit Committee on the appropriateness of the
                                   Department’s accountability and control framework in accordance
                                   with the Committee’s reporting calendar.
          Audit Committee          The Audit Committee has no executive powers in relation to the
                                    operations of the Department.
                                   Provide advice to the Secretary on:
                                    (a)      action to be taken on matters of concern identified in
                                        either a report of the internal auditors or the Auditor-General
                                        concerning the Department; and
                                    (b)      the preparation and review of financial statements of the
                                        Department prior to signing.
                                   Coordinate as far as practicable audit programs conducted by
                                    internal auditors and the Auditor-General. Consequently, it is
                                    authorised to:
                                    (a)      approve annual and strategic internal audit plans;
                                    (b)      review all audit reports involving matters of concern to
                                        senior management, including the identification and
                                        dissemination of good practices;
                                    (c)      seek any information it requires from:
                                          -        any employee (and all employees are directed to co-
                                              operate with any request made by the Audit Committee);
                                              and
                                          -        external parties, including the Australian National
                                              Audit Office;
                                    (d)      obtain outside legal or other professional advice, subject
                                        to the appropriate delegations;
                                    (e)      establish procedures for dealing with concerns and/or
                                        complaints of employees or clients regarding accounting,
                                        internal control or auditing matters; and
                                    (f) request the attendance of departmental officers at meetings as
                                        appropriate.

4.       Controls
4.1.1.   The key controls are:
         (a) internal and external audits;
         (b) accountability to Audit Committee (including the external member) and Executive Board;
             and
         (c) contingent liabilities are reported in the Budget Papers in accordance with the Charter of
             Budget Honesty Act 1998.




                                                     19
5.     References topics
5.1.   Key references

        Legislation            Financial Management and Accountability Act 1997
                               Financial Management and Accountability Regulations 1997
                               Charter of Budget Honesty Act 1998
                               Auditor General Act 1997
        Forms                  Nil
        Other                  Audit Committee Charter
                               Fraud Control Plan
                               Audit Committee Terms of Reference

5.2.   Key contacts

        Branch              Contact for Advice on
        Office of Chief      Audit procedures
        Audit Executive      The Department’s Internal Audit Plan
                             Internal audit services
        Procurement          General terms and conditions of this CEI.
        Assistance and
        Financial Policy
        Team, Financial
        Services Branch

There is no Operational Guideline for this topic. Staff members should contact the relevant Branch
                                      for more information.




                                               20
ACCOUNTS AND RECORDS - CHIEF EXECUTIVE INSTRUCTION 1.4 (V1 -07/2012)

1.       General
1.1.1.   Through business need, legislative obligations and public transparency expectations, you are
         required to capture and maintain timely, accurate and reliable accounts and records.
1.1.2.   Effectively managed official information is a valuable corporate resource to providing
         information for future decision making. It also reduces risk by ensuring more complete
         evidence for possible legal actions.


          Section 48 of the FMA Act requires a Chief Executive to ensure that the accounts and
          records of their agency are kept as required by the FMOs. It also establishes the
          Finance Minister’s entitlement to full and free access to the accounts and records of each
          agency, subject to any law that prohibits disclosure of particular information.

          INSTRUCTIONS – all staff

                 You must maintain appropriate accounts and records to meet the requirements of
                  the FMA Act, FMA Regulations and FMOs.
                 You must comply with any lawful request by the Finance Minister for access to the
                  agency’s accounts and records.
                                                                        Whole of Government Model CEI Provision


1.1.3.   You are to maintain accounts in a manner that reliably records all financial transactions and
         permits comprehensive reporting both to management and to external parties, in particular to
         the Parliament.

2.       Management of official information
2.1.1.   You are to manage official information in a way that:
          (a) allows it to be readily and easily retrieved for re-use or as evidence of decision making
              within the Department;
          (b) reflects the principles of the ‘Commonwealth Protective Security Manual’ (including the
              classification and storage of official information).
2.1.2.   Official information remains the property of the Australian Government unless otherwise
         explicitly stated.
2.1.3.   Some types of records should be assigned with restricted access. The degree of access
         should be determined by the classification of the document relevant to the person's security
         clearance and the subject matter relevant to their responsibilities.
2.1.4.   Official information must not be destroyed or otherwise disposed of unless the destruction
         complies with the directions of the ‘Australian Government Protective Security Policy
         Framework’ or forms part of a disposal process approved by the National Archives of
         Australia through the Archives Act 1983 (such as the deletion of electronic/digital official
         information).
2.1.5.   Official information must only be released outside the department as authorised by law
         (including the Freedom of Information Act 1982, and the Archives Act 1983, and any Court
         Orders), and in accordance with any directives of the Australian Government and the
         Department’s policies.

2.2.     Accounts and records



                                                   21
2.2.1.   The Department’s accounts and records includes (but is not limited to):
         (a) accounts receivable and payable processes, including debtor/creditor management;
         (b) asset management;
         (c) taxation management;
         (d) end of month and end of year processes;
         (e) bank accounts and special accounts management;
         (f) budgeting, appropriation and cash (including petty cash, drawing rights and FMA
             section 12 arrangements) management;
         (g) chart of accounts maintenance;
         (h) FMIS (ie: SAP and iCMS) records;
         (i) negotiable instruments (including bonds, debentures, other securities and shares);
             indemnities, guarantees, warranties, letters of comfort, and accountable items (such as
             credit cards, cheques and Cabcharge vouchers) management;
         (j) legislative and compliance reporting; and
         (k) annual reporting processes.

2.3.     Other financial documents
2.3.1.   You are required to ensure appropriate records are kept securely, in particular those that
         support or relate to:
          (a) decision making, including exercising of a delegation, in respect of public money or
              special public money particularly those relating to procurements, granting, FMA
              section 12 arrangements, debt management, the making payments such as act of grace,
              discretionary compensation, the management (and settlement) of claims and conduct of
              litigation, etc;
          (b) the management of negotiable instruments (including bonds, debentures, other securities
              and shares); indemnities, guarantees, warranties, letters of comfort, and accountable
              items (such as credit cards, cheques and Cabcharge vouchers) in their care;
          (c) budget material including that relating to new policy proposals, appropriations etc; and
          (d) contracts and contract management activities, including the payment of invoices.

2.4.     External requests for access to records
2.4.1.   External parties may lodge applications for the provision of information (including archived
         records). The response of the Department should be shaped by:
          (a) Australian Government’s support for open and transparency in Government (as outlined
              in the Declaration of Open Government); and
          (b) the requirements of legislation (including the Freedom of Information Act 1982, Archives
              Act 1983 and Privacy Act 1988).

3.       Delegations and directions
3.1.1.   There is no formal delegation, however, in addition to the general responsibilities of all staff
         members, the following are applicable:

          Position              Responsibility
          Chief Financial         Maintain accounting records in accordance with legislative and
          Officer                   other requirements.
          Staff members in        Ensure any recordkeeping system used to manage official
          Financial Services        information has appropriate safeguards and checks to protect the
          and Financial             integrity and confidentiality of all official information created,
          Operations                received and processed by the Department.
          Branches                Ensure Official information not captured in the centralised
                                    recordkeeping system is managed through other approved and
          Specialist                (Australian Standards Organisation (ASO)/International
          Financial Advice          Standards Organisation [ISO]) certified systems as appropriate to
          Teams in                  the Department’s critical business functions.


                                                    22
          Position             Responsibility
          COMCAR,                Ensure that records are kept for only a long as the Department,
          Comcover, M&PS           government and the public require them, as established by
          and Property and         disposal authorities.
          Construction           Destroy records only in accordance with an authorised disposal
          Division                 authority.
          Records                Manage and report on the Department’s recordkeeping policies
          Management               and procedures, including the disposal of records.
          Team, Business         Maintain, monitor and review the Department’s recordkeeping
          Services Branch          systems.

4.       Controls
4.1.1.   The key controls are:
         (a) accounts and records are audited annually by ANAO.

5.       Reference topics
5.1.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Freedom of Information Act 1982
                                  Privacy Act 1988
                                  Archives Act 1983
                                  Evidence Act 1995
                                  Public Service Act 1999
                                  Electronic Transaction Act 1999
          CEIs                    5 – Commonwealth Credit Cards and Credit Vouchers
                                  10 – Managing Public Property
          Forms                   Nil.
          Other                     Australian and International Standard AS ISO15489
                                    Commonwealth Protective Security Manual 2007
                                    Declaration of Open Government
                                    Australian Government Information Security Manual
                                    National Archives of Australia Record Management
                                    ICT Strategy & Governance

5.2.     Key contacts

          Branch               Contact for Advice on
          Financial Services    Retention of accounts for activities undertaken.
          and Financial
          Operations
          Branches
          Procurement             General terms and conditions of this CEI.
          Assistance and
          Financial Policy
          Team, Financial
          Services Branch
          Business                Record management protocols.
          Services Branch
          Legal Services          Privacy/FOI considerations of the Department’s documents.
          Branch.

There is no Operational Guideline for this topic. Staff members should contact the relevant Branch
                                      for more information.




                                                  23
INSURANCE - CHIEF EXECUTIVE INSTRUCTION 1.5 (V2 – 07/2012)

          Generally, an agency’s insurable risks are covered by Comcover and Comcare. Agencies
          pay a premium to insure against key risks, such as:
                 property loss, destruction or damage;
                 legal liability claims;
                 motor vehicle loss, destruction or damage;
                 workers’ compensation claims; and
                 various other claims.
          As with any insurance, this cover includes liability caps, excess thresholds and conditions.
          For example, there is the usual insured person’s duty to disclose matters relevant to an
          insurer’s decision whether to accept the risk insured, and on what terms (i.e. the duty of full
          disclosure), and the requirement that they act in good faith. There will be circumstances
          where an agency is not covered, for example where a claim results from a contractual
          breach or an unlawful act.

          INSTRUCTIONS – all staff

                 You should manage Commonwealth resources in a way that minimises the risk of
                  an insurance claim.
                 You must disclose any insurance risks and report any potential insurance claim or
                  incident to your insurer.
                                                                         Whole of Government Model CEI Provision


1.       General
1.1.1.   The Department shall only enter into insurance arrangements through Comcover and
         Comcare.
1.1.2.   The Department’s insurance cover is to be understood by reference to the Comcover
         Insurance Policy and the Department’s Schedules of Cover for the relevant year.
1.1.3.   Comcover Member Services (CMS) provides claims and account management services under
         contract with Comcover and is to be used as the Department’s single point of contact, through
         the Office of Chief Audit Executive (OCAE) in relation to its Comcover insurance cover.
1.1.4.   Comcare provides coverage for workers’ compensation claims liability. Comcare is the
         relevant authority in relation to claim decisions, and the Department is the rehabilitation
         authority and holds delegation under the Safety Rehabilitation and Compensation Act 1988.
         Comcare is also the administrator of the workplace health and safety legislation, holding
         relevant powers and authority in relation to inspection review and issue of penalties and
         conduct of criminal prosecution for breaches of the legislation to organisations and
         individuals.
1.1.5.   You should ensure that:
         (a) arrangements entered into by the Department with other parties contain appropriate risk
              management and insurance provisions (including aspects such as worker’s
              compensation, public liability, professional indemnity and other insurance coverage
              commensurate with the nature of the activity being insured and the level of the
              Department’s insurance arrangements with Comcover); and
         (b) when an indemnity is to be issued, CMS is notified (through OCAE) of the insurable
              liabilities that may arise under the indemnity. Otherwise, under the standard policy terms
              and conditions, such liabilities may not be covered.



                                                    24
2.       Management of insurance arrangements (Comcover)
2.1.1.   You should:
          (a) ensure that the management of an insurance arrangement is consistent with the
              Comcover Insurance Policy and that all communications regarding insurance are sent
              through OCAE;
          (b) undertake appropriate assurance processes and risk assessments to reduce the
              potential for an insurance claim to be made;
         (c) notify CMS (through OCAE) of any incident or event that may give rise to insurance
              claims by or against the Department. This includes any claim submitted directly to CMS;
         (d) ensure that all accidents and incidents are notified to Comcare. Where there is an injury
              or dangerous occurrence, reporting to Comcare is required immediately or as soon as
              reasonably practicable;
         (e) report to CMS (through OCAE) of all incidents and claims against the Department that
              are likely to result in an insurance claim as soon as possible after the event, or at least
              within 5 days:
                 (i) of an incident occurring;
                 (ii) of a claim being made against the Department; or
                 (iii) where the Department becomes aware of circumstances that are likely to give rise
                       to a claim against it.
2.1.2.   There must be no admission of liability in relation to an incident or claim against the
         Department, nor may any claim be settled or costs incurred in connection with a claim, without
         Comcover’s prior written approval.
2.1.3.   An insurance claim must be submitted to CMS (through OCAE) for all losses that are
         recoverable under the Department’s Comcover policy.
2.1.4.   In the annual renewal process the Department must disclose to CMS (through OCAE) for a
         decision by Comcover every matter it knows that is relevant to Comcover in determining the
         insurance cover that can be offered.
2.1.5.   The Department must also notify CMS (through OCAE) of any potentially insurable risks (such
         as new contingent liabilities) identified in any new functions or programs for which it assumes
         responsibility or for any significant new physical assets acquired during the term of the policy.

3.       Management of Insurance arrangements – Workers compensation
         (Comcare)
3.1.1.   The Department recognises its duty of care to ensure its workers including employees,
         contractors, volunteers and other persons, are not put at risk from work being carried out as
         part of Finance’s business or undertaking. Section 19 of the Work Health and Safety Act 2011
         (WHS Act) notes that the Person Conducting a Business or Undertaking (PCBU) (ie: term
         defined in Division 3, of the WHS Act to represent ‘the employer’) must ensure, so far as is
         reasonably practicable, the health and safety of workers. In conjunction with the WHS Act, the
         WHS Strategic Plan and the WHS Policy have been developed, and agreed, and set the
         framework for the management of WHS within the Department.
3.1.2.   All Workers’ Compensation matters are managed in accordance with the Safety Rehabilitation
         and Compensation Act 1988 (SRC Act).

4.       Delegations and directions
4.1.1.   While there is no delegation applicable to Comcover insurance arrangements, specific
         delegations do apply for workers compensation/rehabilitation matters, in addition to the
         general responsibilities applicable to all staff members, the following responsibilities are
         applicable to certain staff members:




                                                    25
         Position               Responsibility
          All staff              Ensure that when entering into an arrangement that contains a
            members                contingent liability that is not covered by FMA regulation 10A, that
                                   agreement under FMA regulation 10 is given and appropriate
                                   insurance obtained. Where FMA regulation 10A applies, this
                                   should be noted in the approvals.
                                  In respect of an injured employee – take all reasonable steps to
                                   provide suitable employment.
             Office of Chief     Manage and provide advice on Comcover arrangements.
              Audit
              Executive
             First Assistant     Exercise delegations as the Rehabilitation Authority under section
              Secretary,           41 of the Safety Rehabilitation and Compensation Act 1988.
              Corporate
              Services
              Division;
             Assistant
              Secretary, HR
              Services
              Branch;
             Director,
              OH&S, HR
              Services
              Branch
             Deputy              Provide risk information, as requested by OCAE or HR Services;
              Secretaries         Ensure that Comcover coverage is held, or at least considered, for
              and Social           all insurable risks in their Business Groups; and
              Club                Ensure that appropriate records are maintained by their Business
              President            Group.

5.       Controls
5.1.1.   The key controls are:
          (a) legally binding contractual provisions;
          (b) reporting incidents that may result in a claim being made (either through insurance or
              workers compensation);
          (c) maintaining records in relation to insurable risks and workers compensation; and
          (d) ensuring that the Department’s insurance arrangements are correct and current.

6.       Reference topics
6.1.     General
6.1.1.   The Department has two policies with Comcover (Consolidated and Administered Policy) to
         deal with insurable risks. The policies are renewed annually based on input from Business
         Groups and covers a financial year period.

6.2.     Overseas travel
6.2.1.   Prior to travelling overseas or outside their country of assignment, staff members should
         obtain an International SOS (ISOS) member card from OCAE. ISOS provides 24 hour
         medical and travel service which is available to staff while on official travel or deployment
         overseas.




                                                    26
6.3.   Key references

        Legislation                Financial Management and Accountability Act 1997
                                   Work Health and Safety Act 2011
                                   Safety, Rehabilitation and Compensation Act 1988
        Delegation                 Internal Financial Delegations Instrument
        Finance Circulars          2006/03 - Limited Liability in Information and Communications
                                    Technology Contracts
                                   2011/01 – Commitments to spend public money (FMA
                                    Regulations 7-12)
        CEI/Operational            2.1 – Approving spending proposals and entering into
        Guideline                   arrangements
                                   2.4 - Official Travel
                                   3 - Procurement
                                   10.4 – Loss and Recovery of Public Property
        Forms                      Incident Report Form
        Other                      Comcover website
                                   Comcare website
                                   Comcover Insurance Policy
                                   Overseas Medical and Travel Assistance – Comcover and
                                    International SOS websites
                                   Comcover Information Bulletins
                                   Financial Management Guidance No. 6: Guidelines for Issuing
                                    and Managing Indemnities, Guarantees, Warranties and Letters
                                    of Comfort, September 2003
                                   Commonwealth Procurement Rules
                                   WHS Strategic Plan
                                   Finance WHS Policy
6.4.   Key contacts

        Branch                      Contact for Assistance on:
        Office of Chief Audit      The Department’s general insurance arrangements.
        Executive                  Liaising with CMS (x2250).
        HR Services Branch         Workers compensation matters and claims.
        Legal Services             Legal nature of claims against the Commonwealth.
        Branch
        Procurement              General terms and conditions of this CEI.
        Assistance and
        Financial Policy
        Team, Financial
        Services Branch

There is no Operational Guideline for this topic. Staff members should contact the relevant Branch
                                      for more information.




                                                27
CEI/OG 2 - COMMITTING TO SPEND PUBLIC MONEY
INTRODUCTION




                           28
About this CEI
This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction
to staff members on committing to spend public money and entering into arrangements. This
includes:
     (a) approving spending proposals and entering into arrangements;
     (b) guarantees, indemnities, warranties and other contingent liabilities;
     (c) official travel; and
     (d) official hospitality.

Proper use of Commonwealth resources
When committing public money you should consider the requirement, under section 44 of the FMA
Act, to ensure proper use of Commonwealth resources (i.e. efficient, effective, economical and
ethical use that is not inconsistent with the policies of the Commonwealth). This is an overarching
requirement that applies to all aspects of an agency’s resource management, including the
management of public money and public property, as well as the administration of programs, the
provision of grants and the procurement of goods or services.

Committing public money
FMA Regulations 7-12 set out the requirements that apply if you are entering into any arrangement
that commits, or may commit, public money. These requirements apply to everyone, including
Ministers.

Specifically, FMA Regulation 8 sets out the steps that must be taken before a person can enter into
an arrangement. An arrangement must not be entered into unless a spending proposal has been
approved under FMA Regulation 9 and, if required, written agreement has been given under
FMA Regulation 10.

FMA Regulation 8 does not mandate the order in which an FMA Regulation 9 approval and an
FMA Regulation 10 agreement must be obtained, but a Chief Executive may require that his/her
staff members seek these approvals in a particular order.

What is a spending proposal?
A spending proposal is any proposal that could lead to a person entering into an arrangement, such
as a contract, funding agreement or guarantee, under which public money is, or may become,
payable.

Spending proposals can also involve notional payments, such as where one FMA Act agency
pays another for services, but no money actually leaves the CRF as both agencies are part of the
Commonwealth. These arrangements should be treated as if they involved real payments, as
required by section 6 of the FMA Act.

The approval of a spending proposal is a separate step that must occur before a person can enter
into an arrangement. It involves an approver applying the test set out in FMA Regulation 9. If the
test is satisfied, the spending proposal can be approved and subject to FMA Regulation 10
agreement (if required), an arrangement can then be entered into under section 44 of the FMA Act
(for example, by signing a contract).

What is an arrangement?
An arrangement is defined in FMA Regulation 3. This definition is very broad and includes, for
example contracts, MOUs, standing offers and grant agreements under which public money is
payable or may become payable. It also includes any agreement that involves a contingent liability
(i.e. a commitment that may give rise to a cost as a result of a future event), such as an indemnity,
guarantee or warranty, even if no money is payable other than the contingent liability. However, the
definition specifically excludes international agreements governed by international law (such as
treaties), employment agreements and certain arrangements relating to statutory appointments and
statutory employment entitlements.

Who can enter into an arrangement?
                                                 29
Arrangements are entered into under section 44 of the FMA Act. The note at section 44 states that
a Chief Executive “has the power to enter into contracts, on behalf of the Commonwealth, in relation
 to the affairs of the Agency”. The note also states that some Chief Executives have delegated this
 power under section 53 of the FMA Act. Delegations are an important way in which Chief
 Executives pass on their powers and functions to staff members within their agency or another
 agency.
                                                                   Whole of Government Model CEI Provision




Instances of Non Compliance

All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).




                                                  30
APPROVING SPENDING PROPOSALS AND ENTERING INTO ARRANGEMENTS –
CHIEF EXECUTIVE INSTRUCTION 2.1 (V2 – 07/2012)

1.       General
1.1.1.   Delegates should:
         (a) inform themselves of their obligations and responsibilities when exercising a delegation;
              and
         (b) complete the financial delegate accreditation before exercising a delegation
              (ie: approving a spending proposal or entering into an arrangement).
1.1.2.   Delegates must not exercise a delegation where:
         (a) there is a real or perceived conflict of interest (including personal benefit); or
         (b) if they are not satisfied that financial management framework requirements have been
              met.
1.1.3.   All decisions to approve a spending proposal are to be recorded in writing.
1.1.4.   Executive Assistants should comply with any additional requirements identified by their SES
         manager.
1.1.5.   In considering spending proposals for approval, you must undertake a ‘whole-of-life contract
         management’ approach and apply the Commonwealth’s financial framework. This includes
         instances where a person outside the Commonwealth handles public money (see CEI 8 –
         Handling of Money by Persons Outside of the Commonwealth).

2.       Spending public money
2.1.1.   You should refer to CEI 3 – Procurement, the Whole of Australian Government Procurement
         Process Considerations and CEI 4 – Grants, when undertaking a procurement or grant
         process.

          Section 44 of the FMA Act and FMA Regulations 7-12 set out the core legal requirements
          that apply to commitments to spend public money. These provisions apply to all agencies
          under the FMA Act and to all persons involved in the commitment of public money.

          Approving Spending Proposals

          INSTRUCTIONS – All staff



                 You must comply with the requirements of FMA Regulations 7-12, if you are
                  undertaking activities that commit or might commit public money.
                 All spending proposals must be approved under FMA Regulation 9.
                       - You can only seek approval for a spending proposal under FMA Regulation
                            9 from a delegate, a Chief Executive or a Minister.
                 If there is insufficient available appropriation to cover the full cost of a spending
                  proposal, written agreement for the cost must be obtained under FMA Regulation 10
                  (unless FMA Regulation 10 does not apply due to the operation of
                  FMA Regulation 10A).
                       - You can only seek agreement for the full cost of the spending proposal
                            under FMA Regulation 10 from a delegate (including a Chief Executive) or
                            the Finance Minister.
                 All decisions about committing public money must be properly recorded.
                                                                     Whole of Government Model CEI Provision




                                                   31
2.2.     FMA regulation 9


          INSTRUCTIONS – Staff with a delegation to approve spending proposals (FMA
          Regulation 9)

                 You must not approve a spending proposal under FMA Regulation 9, unless you
                  are satisfied that giving effect to the spending proposal would be a proper use of
                  Commonwealth resources.
                 You must make reasonable inquiries in considering whether to approve a spending
                  proposal. This includes reasonable inquiries to ensure that the spending proposal
                  complies with relevant policies of the Commonwealth, particularly the general
                  financial management policies.
                       - If a spending proposal involves procurement, you must ensure it complies
                           with the CPRs (see CEI - Procurement).
                       - If a spending proposal involves a grant, you must ensure it complies with
                           the CGGs (see CEI - Grants).
                 If you provide verbal approval for a spending proposal, you must record in writing
                  the terms of the approval as soon as practicable after giving it (FMA Regulation
                  12).
                 If a spending proposal relates to a grant, you must also record in writing the basis for
                  awarding the grant (FMA Regulation 12).
                 You may approve a spending proposal subject to conditions.
                                                                       Whole of Government Model CEI Provision


2.2.1.   You may only approve a spending proposal if you are the Secretary or a delegate. This does
         not exclude the ability of a staff member to approve a spending proposal when specifically
         authorised, including through other legislation.
2.2.2.   An ‘agreement to proceed’ should be sought from an FMA regulation 9 delegate prior to
         approaching the market. If the proposal is likely to be multi-year and/or contain a contingent
         liability, this should be discussed in the request to approach the market.
2.2.3.   FMA regulation 9 approval, with FMA regulation 10 agreement if needed (see also: CEI 2.2 –
         Guarantees, Indemnities, Warranties and Other Contingent Liabilities), should be sought as
         part of concluding the tender evaluation process and before the contract is signed.
2.2.4.   For simple, non-covered procurements, approval to proceed and the formal FMA regulation 9
         approval may occur at the same time but must be before any arrangement is entered into.

2.3.     FMA regulation 10


          INSTRUCTIONS – Staff with a delegation to provide FMA Regulation 10 agreement

                 You may agree under FMA Regulation 10 to the costs that might become payable
                  under an arrangement at any time before the arrangement is entered into.
                 When providing agreement to a spending proposal under FMA Regulation 10, you
                  must comply with the directions in the delegation from the Finance Minister or any
                  directions in the delegation from your Chief Executive.
                    - If the costs that might become payable under an arrangement are not within the
                        scope of the directions in the delegation from the Finance Minister or an
                        agency-specific determination, agreement must be obtained under FMA
                        Regulation 10 from the Finance Minister.
                 If an arrangement includes a contingent liability in relation to an event, you must
                  assess the likelihood of the event occurring and the most probable cost that would
                  be associated.
                 Agreement under FMA Regulation 10 is not required if an arrangement meets the
                  requirements of FMA Regulation 10A.
                                                                     Whole of Government Model CEI Provision




                                                   32
3.       Entering into arrangements

          INSTRUCTIONS – All Staff



                 You must not enter into an arrangement, unless delegated the authority, or
                  authorised by a delegate, under section 44 of the FMA Act.

          INSTRUCTIONS – Staff authorised to enter into arrangements (section 44 of the FMA
          Act)



               Before entering into an arrangement, you must ensure that a spending proposal
                 has been approved under FMA Regulation 9 and, if required, written agreement has
                 been provided under FMA Regulation 10.
               If an arrangement includes a contingent liability in relation to an event, you must
                 assess the likelihood of that event occurring and the most probable cost that
                 would need to be made, in accordance with the arrangement, if the event occurred.
                - If, after making reasonable inquiries, you assess that the likelihood of the event
                     occurring is remote and the most probable cost if the event occurred would not
                     be material, you do not need to seek agreement for that part of the arrangement
                     under FMA Regulation 10.
               Before entering into an arrangement, you should:
                - be satisfied that it will be a proper use of Commonwealth resources; and
                - confirm that any expenditure under the arrangement would be consistent with the
                     purposes of the appropriation.
               If the arrangement involves procurement, you must act in accordance with the
                CPRs (see CEI - Procurement).
               If the arrangement involves a grant, you must act in accordance with the CGGs
                (see CEI - Grants).
               You must not vary an arrangement, unless a new spending proposal has been
                approved under FMA Regulation 9 and, if required, written agreement has been
                provided under FMA Regulation 10.
                                                                   Whole of Government Model CEI Provision




3.1.1.   Contracts must be developed and actively managed throughout the life of the arrangement to
         ensure required outcomes are achieved and contractual obligations are met. You should
         consider changing circumstances and requirements, and initiate remedial action, where
         necessary, in consultation with the appropriate delegate and contractors.

4.       Reporting and documentation
4.1.     Reporting
4.1.1.   For all consultancy contracts (regardless of value) and other contracts valued at $10,000 (inc
         GST) and above, you should record the contract in the Financial Management Information
         System (FMIS - SAP) within one week of entering into the arrangement (or amending such
         arrangements) to allow Procurement Assistance and Financial Policy Team (PAFPT) to report
         the contract on AusTender.
4.1.2.   All contracts at $10,000 or above must be reported on AusTender within 42 days of the
         arrangement being entered into or amended (the details reported are based on contract
         information entered into SAP).
4.1.3.   You are to report all grants on the Department’s Internet site no later than seven working days
         after the funding agreement is signed by both parties.




                                                   33
4.1.4.   The details of contracts, agreements and arrangements need to be reported unless it is
         determined that the details shall not be disclosed. Confidentiality of information should be
         considered on a case by case basis and be consistent with Whole of Australian Government
         (WoAG) policy, applicable legislation and noting that reportable confidentiality has a specific
         meaning.
4.1.5.   You should advise the Secretary of any matter relating to disclosure or other sensitive/high
         risk issue prior to publishing any details.

4.2.     Documentation
4.2.1.   You should retain an appropriate level of documentation when spending public money and
         entering into an arrangement. Documentation may include:
          (a) the reason for the procurement;
          (b) the process followed;
          (c) decisions (including the procurement method, value for money assessment and delegate
              approvals);
          (d) scope of the services;
          (e) contract term (end date), including extension options;
          (f) confidentiality issues;
          (g) market approach value/contract value;
          (h) funding arrangements;
          (i) progressive expenditure;
          (j) consideration/addressing of risks;
          (k) contingent liability considerations; and,
          (l) notices relating to the contract as required.


5.       Delegations and directions
5.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

         Arrangements                                    Source (including list of delegates)
         Under FMA regulation 10, agree to               Financial Management and Accountability
         expenditure that might become payable           (Finance Minister to Finance Secretary)
         under an arrangement where there is             Delegation Instrument
         insufficient appropriation.
                                                         Internal Financial Delegations Instrument
         Limits apply (refer to the delegations
         instrument).
         Under FMA regulation 9, approve general         Internal Financial Delegations Instrument
         spending proposals in accordance with any
         applicable monetary limits.

         Limits apply (refer to the delegations
         instrument).
         Under FMA section 44, enter into or vary        Internal Financial Delegations Instrument
         directions in a way that promotes the
         proper use of Commonwealth resources.

         Limits apply (refer to the delegations
         instrument).




                                                    34
         5.1.2.

APPROVING SPENDING PROPOSALS AND ENTERING INTO ARRANGEMENTS -
OPERATIONAL GUIDELINE 2.1

1.       General
1.1.1.   Staff members have a responsibility to ensure that the spending of public money is
         undertaken in accordance with all Commonwealth legislation and policies.
1.1.2.   In order to spend public money, appropriate approval is required. This approval must be from
         a staff member who has been authorised (ie: through a delegation) to make such an approval.
1.1.3.   FMA regulation 8 states that a person must not enter into an arrangement unless:
         (a) a spending proposal has been approved under regulation 9, and
         (b) if required, written agreement has been given under regulation 10.
1.1.4.   A signed contract, agreement or arrangement (under FMA section 44) should be in place
         before any work and/or service commences. If this does not occur, Legal Services Branch
         should be consulted.

2.       Process guide
2.1.1.   The following are the key steps when spending public money. Only key elements relevant to
         the exercising of FMA delegations are covered in further detail in this Operational Guideline.


          Spending public money (procurement) key steps
          Step 1: Plan the procurement based on an identified need

          Step 2: Scope the procurement

          Step 3: Determine the procurement method

          Step 4: Prepare to approach the market

          Step 5: Approach the market

          Step 6: Evaluate submissions and conclude the tender process

          Step 7: Manage the contract

           The number of steps and the extent to which they are to be followed will depend on the
           nature and value of your procurement.

3.       General guidance
3.1.     Identify and agree need
3.1.1.   Staff members should seek ‘agreement to proceed’ from an FMA regulation 9 delegate to
         ensure there is support for committing staff resources to explore the feasibility of the spending
         proposal. A written record of the agreement (ie: email, file note or Minute) should be retained.

3.2.     Preparation of the procurement plan
3.2.1.   The procurement plan should:
         (a) reflect the value, length and nature of the spending proposal;
         (b) outline applicable policy considerations (including risks and consistency with
              Government policies); and
         (c) demonstrate how the proposal will facilitate the ‘proper use’ of public money.
3.2.2.   Estimates of all cost components (including taxes, variable costs, indexation and extension
         options) should be provided to assist in forming the basis for determining how to approach the
         market. For example, if the value is above the threshold (ie. $80,000 (inc GST) or above for



                                                    35
         non-construction or $9 million (inc GST) for construction services), it must comply with the
         requirements of the CPRs.
3.2.3.   Consideration is to be given as to the extent to which funding is available to cover the entire
         spending proposal (including multi-year proposals and contingent liabilities).
3.2.4.   Spending proposals that involve notional payments, such as a Memorandum of
         Understanding (MOU) between agencies, should be treated as if they involve real payments
         (as required by section 6 of the FMA Act).

3.3.     Identify the delegate(s)
3.3.1.   The appropriate delegate (FMA section 44 or FMA regulation 9/10) is identified in the ‘Internal
         Financial Delegation Instrument’. Staff members should escalate proposals to higher
         delegates where the nature, duration or value of a proposal indicates. Particular care should
         be taken in determining the delegate of Whole of Australian Government (WoAG)
         arrangements.
3.3.2.   The procurement plan/spending proposal (under $10,000) should provide the delegate with
         sufficient information and/or documentation to allow a determination to be made as to whether
         approval should be provided or the contract entered into.

3.4.     Authorisations
3.4.1.   Staff members generally only hold delegations in their own right if they are formally in a
         position recognised by the financial framework (ie: legislation or a delegation instrument).
3.4.2.   Where a delegate wishes to nominate another staff member to exercise delegations on their
         behalf, an authorisation form is available through the Department’s Intranet. A part
         authorisation (ie: allowing the issue of Cabcharge vouchers) can also be given, although the
         delegate providing the authorisation should set out the terms of the authorisation in writing.
         The authorisation should be retained for audit purposes and copied to the Accounts
         Processing Unit and the relevant Group Financial Advisor in the Financial Services Branch.
3.4.3.   Authorised officials are not delegates. However, they should:
         (a) familiarise themselves with the delegated authority requirements;
         (b) undertake the practice Financial Delegation Accreditation; and
         (c) provide details of their approvals to the delegate who authorised them to enable the
              correct acquittal payments, such as Cabcharge items in the intranet Credit Management
              System (iCMS).

3.5.     Approval under FMA regulation 9
3.5.1.   Only a staff member with FMA regulation 9 delegation, the Secretary or Finance Minister may
         exercise the function of an Approver (subject to the conditions of any specific delegation or
         authority).
3.5.2.   An agreement to proceed should generally be sought from an FMA regulation 9 delegate prior
         to approaching the market. FMA regulation 9 approval (with FMA regulation 10 agreement
         where required), should be sought as part of concluding the tender evaluation process and
         before any arrangement is entered into.
3.5.3.   FMA regulation 9 approvals should be in writing. Requests should generally be submitted
         using the templates available on the Department’s Intranet, however where the expenditure is
         modest, other forms of approval may suffice as long as there is adequate evidence of the
         required considerations being undertaken (such as an email from the delegate).
3.5.4.   If the approval of a spending proposal is not given in writing, in accordance with FMA
         regulation 12(1), the Approver must record the terms of the spending proposal in writing as
         soon as practicable after giving the approval. In instances where the proposal relates to a
         grant, the approver must also (written immediately or as soon as practicable after approval in
         another form is given) include the basis on which the approver is satisfied that compliance
         with FMA regulation 9 has occurred.




                                                    36
3.5.5.   In order to approve a spending proposal under FMA regulation 9, approvers must be satisfied
         that, after making reasonable inquiries, that the spending proposal:
         (a) is in accordance with the policies of the Commonwealth;
         (b) complies with all relevant legislative principles;
         (c) will make an efficient, effective, economical and ethical use of public money; and
         (d) if for Special Public Money, is consistent with the terms under which the money is held
               by the Commonwealth.

3.6.     FMA regulation 10 - General
3.6.1.   FMA regulation 10 enables the Government to manage the extent to which current decisions
         taken by Ministers and staff members to ‘lock-in’ future options/costs on the Budget. The
         operational needs of the Australian Government require that competing demands are
         balanced and that the decisions of agencies are transparent and secure value for money for
         the Commonwealth.
3.6.2.   The Department often enters into arrangements (ie: major capital expenditure projects,
         purchases of major equipment and long-term leases of real estate) that may extend well
         beyond the current financial year or include a contingent liability.
3.6.3.   FMA regulation 10 provides a mechanism for managing the approval process in a way that is
         acceptable to the Parliament (which is the final authority on all appropriation matters). Under
         this regulation, the Finance Minister can authorise future spending proposals that go beyond
         the coverage of the appropriations that have been passed or are before the Parliament.
3.6.4.   FMA regulation 10 power has been delegated to certain staff members (subject to certain
         thresholds/limitations), including in relation to WoAG matters.

3.7.     Agreement under FMA regulation 10
3.7.1.   Prior to considering the approval of a spending proposal, the Approver must be aware of
         whether there is sufficient, uncommitted available appropriation(s) to cover the entire
         spending proposal. This includes multi-year proposals and/or those with a contingent liability.
3.7.2.   If there is insufficient, uncommitted available appropriation(s) to cover the maximum amount
         that may become payable under a spending proposal, including the most probable
         expenditure under a contingent liability, written agreement under FMA regulation 10 must be
         sought, preferably before the FMA regulation 9 approval is given.
3.7.3.   Where a contingent liability has been assessed under FMA regulation 10A as being remote
         (ie: less than 5% chance of occurring) and not material (ie: less than $5 million), this should
         be noted in the request for FMA regulation 9 approval.
3.7.4.   FMA regulation 10 agreement must be in writing. The request should be submitted using the
         templates available on the Department’s Intranet.
3.7.5.   The method to use when calculating the total potential expenditure of the spending proposal
         is reliant on the type of appropriation being utilised or the nature of the contingent liability
         (refer to Finance Circular 2011/01 – Commitments to Spend Public Money (FMA regulations 7
         to 12) and CEI 2.2 – Guarantees, indemnities, warranties and other contingent liabilities).

3.8.     Entering into contract, agreement or other arrangement
3.8.1.   Where a contingent liability is agreed to under FMA regulation 10, staff members should
         confirm that it is covered by Department’s Comcover Insurance policy and, if not, ensure
         provision is made before an FMA section 44 delegate may enter into the arrangement.
3.8.2.   Only an FMA section 44 delegate, the Secretary or the Finance Minister may enter into
         arrangements on behalf of the Commonwealth, subject to certain thresholds/limitations,
         particularly in respect of WoAG arrangements.
3.8.3.   The FMA section 44 delegate should ensure that they have made all necessary and
         reasonable enquiries to confirm approval and agreement has been obtained under FMA




                                                   37
        regulations 9 and 10 as needed, and that any contingent liability is covered by the
        Department’s Comcover insurance arrangements.
3.8.4. If a FMA section 44 delegate decides to authorise another staff member to enter into
        arrangements on their behalf, written documentation should be maintained evidencing the
        authorisation.
3.8.5. All arrangements, including where public money is not payable, must comply with relevant
        legislative requirements and must have appropriate measures in place to protect the
        Australian Government’s interests.
3.8.6. When not using WoAG/Departmental contract templates or purchase orders, legal advice
        should be sought on the form of contract.
3.8.7. Staff members should consider the Australian National Audit Office’s Better Practice Guide
        ‘Developing and Managing Contracts 2011-12‘ for guidance on the development and
        management of contracts.
3.8.8. All contracts should be developed and actively managed throughout the life of the
        arrangement to ensure required outcomes are achieved and that the contractual obligations of
        both parties are met. Staff members should take account of changing circumstances and
        requirements, and initiate remedial action where necessary in consultation with the delegate
        and contractors.
3.8.9. Contracts should be administered using sound risk management practices (see CEI 1.1 –
        Risk Management).
3.8.10. Staff members should ensure that documentation on entering into the contract is stored on
        file, and that appropriate steps are undertaken to ensure that any reporting or publishing
        requirements for a contract, agreement or arrangement are managed.
3.8.11. To facilitate the payment of any accounts, staff members are to ensure the proper recording
        of all contracts, agreements or arrangements entered into, including that:
        (a) a purchase order has been raised in the FMIS for procurements of $10,000 (inc GST) or
              above; and
        (b) a contract has been raised in the FMIS for all consultancies and other procurements of
              $10,000 (inc GST) or above.

3.9.     Variations
3.9.1.   Requests for contract extensions and variations are generally new spending proposals and
         require separate approval under FMA regulation 9, FMA regulation 10 (if applicable) before
         the revised arrangement can be signed by the FMA section 44 delegate.

4.       Controls
4.1.1.   Controls in relation to the approval of spending proposals and the entering into of
         arrangements include:
         (a) financial delegation levels, accreditation and certificate of compliance reporting;
         (b) tender probity checks and risk assessments;
         (c) vetting of tenders released on AusTender;
         (d) quality assurance check of contracts entered into the FMIS (SAP);
         (e) documentation requirements (including decisions);
         (f) public reporting obligations; and
         (g) internal and ANAO audits.

5.       Reference topics
5.1.     Social Club
5.1.1.   The Social club operates within the Department. The Social Club Procedures Manual
         provides procedures for activities to ensure the proper use of public money.

5.2.     Efficient, effective, economical and ethical



                                                    38
5.2.1.   Efficient relates to the achievement of the maximum value for the resources used. In
         procurement, it includes the selection of a procurement method that is not inconsistent with
         policies of the Commonwealth and that is the most appropriate for the procurement activity,
         given the scale, scope and risk of the procurement.
5.2.2.   Effective relates to the extent to which intended outcomes or results are achieved. It concerns
         the immediate characteristics, especially price, quality and quantity, and the degree to which
         these contribute to specified outcomes.
5.2.3.   Economical relates to minimising cost. It emphasises the requirement to avoid waste and
         sharpens the focus on the level of resources that the Commonwealth applies to achieve
         outcomes.
5.2.4.   Ethical relates to honesty, integrity, probity, diligence, fairness and consistency. Ethical
         behaviour identifies and manages conflicts of interests, and does not make improper use of
         an individual’s position.

5.3.     Delegation instruments and determinations
5.3.1.   Where a staff member has been given a delegation, the statutory power has been transferred
         to them and they are personally accountable for their actions in exercising the powers. A
         delegation is different from an authorisation in that an authorisation is not a transfer of the
         statutory authority.
5.3.2.   Where the operations of an agency are such that the standard limits of the FMA regulation 10
         delegation would create inefficiencies in the operations of that agency, the Finance Minister
         has the power to issue a specific determination.

5.4.     Key references

          Legislation                Financial Management and Accountability Act 1997
                                     Financial Management and Accountability Regulations 1997
                                     Commonwealth Procurement Rules
          Finance Circular           2003/02 – Guidelines for Issuing and Managing Indemnities,
                                      Guarantees, Warranties and Letters of Comfort
                                     2004/14 – Discounts for prepayment and early payment
                                     2006/03 – Limited Liability in Information and Communications
                                      Technology Contracts
                                     2009/03 – Grants and other Common Financial Arrangements
                                     2009/04 – Grants: Reporting Requirements
                                     2009/11 – Best Fare of the Day for International Official Air
                                      Travel
                                     2011/01 – Commitments to Spend Public Money (FMA
                                      Regulations 7 to 12)
                                     2011/07 - Certificate of Compliance - FMA ACT Agencies
                                     2012/04 - Use of the Lowest Practical Fare for Official Domestic
                                      Air Travel
          CEIs/Operational           2.2 – Guarantees, indemnities, warranties and other contingent
          Guidelines                  liabilities
                                     3 – Procurement
                                     4 – Grants
                                     5 – Commonwealth Credit Cards and Credit Vouchers
          Templates/Forms            Refer ProcureAssist portal for templates and checklists
          Other                      Comcover Insurance Policy
                                     Legal Services Directions
                                     Finance Social Club Procedures Manual
                                     Exercising Financial Delegations in Finance
                                     WoAG Procurement Internet Site
                                     ANAO Developing and Managing Contracts 2011-12




                                                   39
5.5.   Key contacts

       Branch                      Contact for Assistance on:
       Procurement                This CEI and Operational Guideline.
       Assistance and             Application of the FMA legislation.
       Financial Policy           Certificate of Compliance requirements.
       Team, Financial            FMA delegations and maintenance of the Officials Delegation
       Services Branch             Structure Chart.
       Group and Specialist       Support SES with advice as required.
       Financial Advice           Funds/appropriation availability.
       Teams                      Delegate accreditation and system access.
       Financial Framework        Establishing WoAG arrangements (ie: seeking approval from
       Policy Branch, FMG          the Secretary or Finance Minister)
       Legal Services             Legal advice.
       Branch, COOG               Contingent liabilities.
                                  Contract development and management.
                                  Legal Services Directions.
       Office of Chief Audit      Risk.
       Executive                  Fraud.
                                  Contingent liabilities and the Comcover Insurance Policy.
       Social Club                Social club activities
       President




                                              40
GUARANTEES, INDEMNITIES , W ARRANTIES AND OTHER CONTINGENT LIABILITIES
- CHIEF EXECUTIVE INSTRUCTION 2.2 (V2 – 07/2012)

1.       General
1.1.1.   You should ensure limits on the Department’s financial liability, time limits, termination
         clauses and subrogation clauses are included in all indemnities, guarantees and warranties
         provided by the Department. Where agreement is sought for an arrangement that does not
         comply with these standard conditions, the Secretary or Finance Minister must be advised, in
         writing, of the reasons for such proposed action (refer Finance Circular 2003/02 – Guidelines
         for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort).

          Contingent liabilities are commitments that may give rise to a cost as a result of a future
          event. They often result from indemnities, guarantees, warranties, letters of comfort and
          certain liability caps in contracts. Contingent liabilities are generally used to allocate risk
          between parties to an arrangement. Often this involves the Commonwealth accepting
          additional risks and the other party experiencing reduced risks.

          INSTRUCTIONS – All staff
              You must not enter into an arrangement that involves a contingent liability, unless
                you have been delegated the authority, or authorised by a delegate, under section
                44 of the FMA Act
                                                                          Whole of Government Model CEI Provision


1.2.     Delegates
1.2.1.   A delegate must not exercise a delegation if they are not satisfied that financial management
         framework requirements are met. Delegates should understand their obligations under the
         financial management framework when exercising a delegation.
1.2.2.   Only the Finance Minister or the Secretary may approve a proposal to provide a Letter of
         Comfort to a potential supplier. In general, the Department should not enter into any
         arrangement which includes the provision of a Letter of Comfort.
1.2.3.   Only an FMA regulation 10 delegate, the Secretary or the Finance Minister may agree to
         proposals that include a contingency liability under FMA regulation 10 and these are subject
         to certain thresholds/limitations.
1.2.4.   Where FMA regulation 10A applies to a contingent liability, this should be noted in the request
         for FMA regulation 9 approval.

2.       Entering into arrangements involving contingent liabilities
2.1.1.   You are to obtain written agreement under FMA regulation 10 (preferably before FMA
         regulation 9 approval is given), if there is insufficient, uncommitted available appropriation(s)
         to cover the maximum amount that may become payable under a spending proposal,
         including the most probable expenditure under a contingent liability.
2.1.2.   FMA regulation 10 is not triggered if, under FMA regulation 10A, the likelihood of the
         contingent liability is remote (less than 5% chance of occurring) and the most probable
         expenditure is not material (less than $5 million).




                                                     41
          INSTRUCTIONS – Staff authorised to enter into arrangements involving contingent
          liabilities

                 When entering into an arrangement that involves a contingent liability, you must
                  comply with the instructions on “Approving Spending Proposals and Entering into
                  Arrangements” CEI.
                 If the arrangement involves a loan guarantee, you must obtain written approval
                  from the Finance Minister for the loan guarantee under FMA Regulation 11.
                 You cannot enter into an arrangement that involves a contingent liability with another
                  FMA Act agency.
                                                                          Whole of Government Model CEI Provision


2.1.3.   Where a contingent liability is agreed to under FMA regulation 10, you should confirm that it is
         covered by the Department’s Comcover Insurance policy and, if not, ensure adequate
         coverage is made. Following this, an FMA section 44 delegate may enter into the
         arrangement.
2.1.4.   In the event that FMA regulation 10 or 10A may be triggered, legal advice should be sought if
         needed before any arrangement is entered into to ensure the nature of the contingent liability
         is one that can be accepted or if negotiations are required.
2.1.5.   Consideration should be given at all times by the delegate to the Commonwealth’s policy on
         contingent liabilities and, in the case of ICT, any similar policy.

3.       Managing arrangements involving contingent liabilities
3.1.1.   You should ensure the relationship with the indemnified party is maintained to an appropriate
         level to reduce the likelihood of the contingent liability being triggered.
3.1.2.   You are to continuously review arrangements involving an indemnity, warranty or other
         contingent liability to determine whether circumstances have changed to warrant the
         conditions still being in place.

4.       Reporting
4.1.1.   Contingent liabilities are to be reported as required (ie: this can include in the Department’s
         Annual Financial Statements).

5.       Delegations and directions
5.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

         Arrangements                                     Source (including list of delegates)

         Under FMA regulation 10 agree to                 Financial Management and Accountability
         expenditure that might become payable            (Finance Minister to Finance Secretary)
         under an arrangement where there is              Delegation Instrument
         insufficient appropriation.
                                                          Internal Financial Delegations Instrument
         Limits apply (refer to the delegations
         instrument).




                                                    42
GUARANTEES, INDEMNITIES , W ARRANTIES AND OTHER CONTINGENT LIABILITIES
– OPERATIONAL GUIDELINE 2.2

1.       About contingent liabilities
1.1.1.   The potential costs under a contingent liability of the Department must be included in the
         value for money consideration(s) for any procurement.
1.1.2.   The most common forms of contingent liability are indemnities and limitations of liability (being
         a cap on the liability of a supplier) in contracts.
1.1.3.   This Guideline does not discuss/relate to contingent liabilities provided for under a separate
         statutory framework.

2.       Process guide
2.1.     Legal advice
2.1.1.   Upon becoming aware of a potential contingent liability in an arrangement, staff members
         should where needed, refer the matter to the Legal Services Branch (LSB) for advice on:
         (a) the Department’s potential exposure under the contingent liability; and
         (b) whether, in LSB’s opinion, there may be a more acceptable wording of the contingent
             liability (such as narrowing the wording so that the clause reflects the liabilities that the
             Department is already exposed to under common law or legislation).
2.1.2.   This applies in respect of FMA regulation 10 and 10A.

2.2.     Risk assessment and risk management strategy
2.2.1.   Following a review of the arrangement, including seeking legal advice where needed,
         identification of the specific risks associated with the proposed contingent liability should be
         undertaken.
2.2.2.   The specific risks identified should subsequently be analysed and assessed so as to allow the
         financial delegate to consider whether:
         (a) there are any direct or indirect risks arising from the spending proposal and any proposed
              transaction under it;
         (b) the possible financial consequences of the risk event(s) that could arise under the
              contingent liability; and
         (c) the likelihood of the risk event and those consequences occurring.
2.2.3.   A formal risk assessment should occur in relation to the risks identified so as to make clear
         how each aspect of the risk can be managed to minimise the impact/likelihood.
2.2.4.   For a low-value, once-off procurement (such as the hire of a vehicle), it may be considered
         appropriate to undertake a limited risk assessment process.
2.2.5.   The Office of Chief Audit Executive (OCAE) is available to provide advice and support in
         relation to risk assessments (also refer to CEI1.1 – Managing Risk).

2.3.     Negotiation
2.3.1.   After consideration of the risk assessment, it should be determined whether the Department
         or the potential supplier is better placed to manage the risk associated with the contingent
         liability. Commonwealth policy is that the party who is best able to manage the risk should
         bear responsibility for the risk.
2.3.2.   Where the potential supplier is in a position to best manage the risk, staff members should:
         (a) attempt to negotiate with the potential supplier to remove the contingent liability clause(s)
              from the contract or agreement; or, if not successful,
         (b) attempt to have the clause replaced with a more narrowly worded clause (as advised by
              LSB); or, if not successful,




                                                     43
         (c) undertake negotiations with the potential supplier (and LSB) to minimise the impact of the
             contingent liability clause(s) on Finance and the Commonwealth. Such negotiations
             should consider there being:
              a time limit on possible claims;
              a termination for convenience clause for the benefit of the Commonwealth;
              maximum financial limits on claims;
              subrogation and notification clauses; and
              additional legislative and policy requirements applicable.

2.4.     Alternative potential suppliers, value for money and the cost/benefit decision
2.4.1.   In instances where it is not possible to negotiate the removal or amendment of the contingent
         liability clause(s) in the contract or agreement, staff members may:
         (a) consider utilising the services of another potential supplier, or
         (b) determine whether the benefits to the Department from accepting the contingent liability
              and proceeding with the spending proposal outweigh the potential costs to the
              Commonwealth under the contingent liability; or
         (c) cease the procurement.

2.5.     Check for compliance
2.5.1.   Upon completing any negotiations relating to a contingent liability clause, consideration and
         review must be undertaken to ensure that Commonwealth and the Department’s policies have
         been followed at all stages of the consideration. In particular:
         (a) refer Finance Circular 2003/02 – Guidelines for Issuing and Managing Indemnities,
              Guarantees, Warranties and Letters of Comfort.
         (b) for liability caps in ICT contracts, Finance Circular 2006/03 – Limited Liability in
              Information and Communications Technology Contracts should be considered.
2.5.2.   Where a contingent liability is not compliant or the clause has not (completely) minimised the
         impact of the contingent liability of the Department, in the event that the contract or agreement
         is still accepted, the reasons for such an acceptance must be documented and recorded in
         writing.

2.6.     Indemnity approval from Comcover
2.6.1.   Indemnity approval may need to be sought from Comcover in relation to the contingent liability
         after completing the FMA regulation 10 process. This must be obtained before the
         Department enters into the contract or agreement that contains the indemnity.
2.6.2.   If the proposed contingent liability is an indemnity (or a cap on the potential supplier’s liability
         that amounts to an indemnity), it will be necessary to request Comcover extend the
         Department’s insurance policy to cover any insurable liabilities under the indemnity.
2.6.3.   All requests should be sent by email to the OCAE (who will forward the request to Comcover
         Member Services) and include:
         (a) copies of the relevant indemnity clause(s) of the draft contract or agreement;
         (b) a brief outline of the spending proposal and why it has been decided that the expected
              benefits of accepting the indemnity outweigh any risk associated with the indemnity;
         (c) detail that the indemnity complies with Government policies or, if it does not comply, why
              a compliant indemnity clause was unable to be negotiated;
         (d) a request that the indemnity be covered by the Department’s Comcover policy;
         (e) an attachment of the legal advice obtained of the Department’s exposure under the
              proposed indemnity; and
         (f) an attachment of the risk assessment/risk management plan in regards to the indemnity.
2.6.4.   Upon receipt of a response, if Comcover approves the indemnity for cover, OCAE will advise
         the extent to which the Department’s insurance policy covers the entire indemnity or whether




                                                     44
         any exclusions are applicable and any risk management/mitigation strategies that need to be
         undertaken by the staff member.

2.7.     FMA regulation 10 agreement and FMA regulation 9 approval
2.7.1.   Staff members should refer to CEI 2.1 - Approving Spending Proposals and Entering into
         Arrangements.

3.       Controls
3.1.1.   Controls in relation to the management of guarantees, indemnities, warranties and other
         contingent liabilities include:
         (a) financial delegation levels, accreditation and certificate of compliance reporting;
         (b) tender compliance checks and risk assessments;
         (c) quality assurance check of contracts;
         (d) documentation requirements (including decisions);
         (e) public reporting obligations; and
         (f) internal and external audits.


4.       Reference topics
4.1.     How to calculate the most probable expenditure
4.1.1.   To calculate the most probable expenditure that may occur, staff members should refer to
         Finance Circular 2011/01 – Commitments to Spend Public Money (FMA Regulations 7 to 12).

4.2.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997
                                  Commonwealth Procurement Rules
          Finance                 2003/02 – Guidelines for Issuing and Managing Indemnities,
          Circulars                Guarantees, Warranties and Letters of Comfort
                                  2006/03 – Limited Liability in Information and Communications
                                   Technology Contracts
                                  2011/01 – Commitments to Spend Public Money (FMA
                                   Regulations 7 to 12)
                                  2011/07 Certificate of Compliance - FMA Act Agencies
          CEIs/Operational        2.1 – Approving Spending Proposals and Entering into
          Guidelines               Arrangements
                                  3 - Procurement
          Templates/Forms         Refer ProcureAssist portal for templates and checklists
          Other                   Finance Minister’s Orders for Financial Reporting
                                  A Guide to Limiting Supplier Liability in ICT Contracts with
                                   Australian Government Agencies, August 2006
                                  Comcover Insurance Policy
                                  Comcover Information Bulletin (Issue 33 – Indemnities)

4.3.     Key contacts

          Branch                   Contact for Assistance on:
          Procurement             This CEI and Operational Guideline.
          Assistance and          Procurement.
          Financial Policy        Application of the FMA legislation in the Department.
          Team, Financial         Certificate of Compliance requirements.
          Services Branch         FMA delegations and maintenance of the Finance Officials
                                   Delegation Structure Chart.



                                                  45
Branch                 Contact for Assistance on:
Financial             Establishing WoAG arrangements.
Framework Policy
Branch
Legal Services        Legal advice.
Branch                Contingent liabilities.
                      Contract development and management.
Office of Chief       Risk.
Audit Executive       Fraud.
                      Procurement compliance/probity reviews.
                      Contingent liabilities and the Comcover Insurance Policy.




                                      46
OFFICIAL TRAVEL - CHIEF EXECUTIVE INSTRUCTION 2.3 (V3 –07/2012)

1.       General

          Official travel is any travel where the Commonwealth is responsible for any of the direct or
          indirect costs associated with that travel. This includes travel by staff members to
          undertake work duties and travel where an agency pays for, or reimburses, the travel of
          other persons (such as contractors) to achieve one or more Commonwealth policy
          objectives.

          Official travel should only be undertaken where there is a demonstrated business need and
          where other communication tools, such as teleconferencing and videoconferencing, are not
          appropriate alternatives.

          INSTRUCTIONS – All Staff
               You must not enter into an arrangement for official travel, unless:
                   - you have been delegated the authority, or authorised by a delegate, to do so
                       under section 44 of the FMA Act; and
                   - the requirements of FMA Regulations 7-12 have been met (See instructions on
                       - “Approving Spending Proposals and Entering into Arrangements” CEI).
               You must act in accordance with the CPRs when procuring official travel (see CEI -
                  Procurement).
               Where the Government has established Coordinated Procurements for a
                  particular travel activity, you must use the arrangement established for that activity,
                  unless an exemption has been provided.
          You must use your agency’s contracted travel management company to access travel
          services offered under the Deed of Standing Offer for the Provision of Whole of
          Australian Government Travel Management Services.
                                                                          Whole of Government Model CEI Provision


1.1.1.   You must:
           (a) seek approval from an FMA regulation 9 delegate before confirming any domestic
               official travel arrangement(s);
           (b) seek approval from the Secretary before any international travel bookings are
               confirmed unless the Secretary has agreed to other approval arrangements;
           (c) achieve value for money by purchasing the Lowest Practical Fare (LPF) for domestic
               air travel, and the Best Fare of the Day for international official air travel (IBF);
           (d) ensure official travel represent an efficient, effective, economical and ethical use of
               Commonwealth resources;
           (e) consider all travel arrangements impartially and without regard to personal preference
               (including lounge access or aircraft type); and
           (f) ensure acquittals are undertaken as needed of your official travel arrangements.
1.1.2.   You must not:
           (a) approve your own official travel; and
           (b) use or take advantage of official travel to obtain a personal benefit.
1.1.3.   Any proposed personal component in official travel should be included in the request to the
          delegate as Fringe Benefit Tax (FBT) which may apply to both yourself and the Department.

1.2.     Domestic travel
1.2.1.   The LPF policy is based on three core principles – necessity of travel, value for money and
          reasonableness. If LPF is not obtained, the decision and reasons must be documented.
1.2.2.   You must travel by economy class on all routes between Sydney, Melbourne and Canberra.
          On other routes:



                                                   47
          (a)    Senior Executive Service (SES) staff members may travel business class; and
          (b)    non-SES level staff members are to travel economy class domestically unless there is
                 a business case and Deputy Secretary approval for them to fly business class.
1.2.3.   Where official travel other than air is considered to be appropriate, you should ensure that
          such travel is in accordance with departmental and/or Commonwealth policies.

1.3.     International travel
1.3.1.   The IBF policy is based on five core principles – necessity of travel, value for money,
           reasonableness, safety and materiality. If you do not obtain the IBF, the decision and the
           reasons for doing so must be documented on file.
1.3.2.   You may travel business class for international travel. The class of travel within an overseas
           country should be commensurate with the nature of the travel and your classification level.
1.3.3.   If required to use options other than air for official travel, you should consider alternate
           transport arrangements that represent value for money, safety and reasonableness.

1.4.     Consultants, contractors and other persons
1.4.1.   Where travel is included, contracts should require consultants and contractors to travel at the
          same class of travel as staff members unless otherwise approved by a Deputy Secretary at
          the time of contract negotiations (or Secretary in respect of international travel or travel by
          Deputy Secretary equivalents).
1.4.2.   An FMA regulation 9 delegate may approve such travel where there is a demonstrated
          business need to pay the travel costs of other persons (ie: such as subject matter experts).
1.4.3.   You are not to commit to any travel arrangements or meet any travel costs (including class of
          travel) of other persons until approval has been given by an FMA regulation 9 delegate. The
          delegate should be satisfied that there is no conflict and that it is an effective, efficient,
          economical and effective use of public money.
1.4.4.   Where possible, you should book the travel and accommodation of other persons through
          departmental arrangements.

1.5.     Travel expenses
1.5.1.   Under the Department’s employment arrangements, the ‘reasonable and actual costs
          incurred’ method generally applies in respect of travel expenses.

1.6.     Sponsored travel and externally funded travel
1.6.1.   You may undertake official travel funded by an external source only where there is no real or
          perceived conflict of interest.
1.6.2.   You should not accept offers of sponsored/externally funded travel without prior approval from
          a Deputy Secretary. Following approval, such travel should be managed in accordance with
          departmental or Commonwealth policies on accepting hospitality and receiving gifts or
          benefits (see CEI 2.4 – Official Hospitality). Any travel conditions and entitlements must be
          specified in the head agreement between the parties.

1.7.     Airline reward benefits (including frequent flyer points) and lounge memberships
1.7.1.   You must not accrue frequent flyer and/or loyalty points as a result of official travel.
1.7.2.   You may accrue status credit points only for airline corporate lounge memberships.
1.7.3.   Staff members may obtain airline lounge memberships (ie: day/temporary memberships), only
          if prior approval has been obtained by their SES FMA regulation 9 delegate.




                                                   48
1.8.     Utilising leave, weekends or public holidays in conjunction with official travel
1.8.1.   Requests seeking to utilise leave, weekends or public holidays, or accompaniment by a non-
          departmental person, in conjunction with official travel may be approved at the discretion of
          the delegate approving the travel.
1.8.2.   The delegate should consider the impact of the request on operational needs, the
          appropriateness of the length of leave/extension, the ability to withstand public scrutiny as
          well as potential FBT liabilities.

1.9.     Arrangements with travel providers
1.9.1.   Any arrangement with supplier(s) to provide travel services to the Department should be
          consistent with the policies of the Commonwealth.
1.9.2.   You are to book official travel arrangements through the Department’s Travel Management
          Company (TMC) as per the contracted arrangements. Where appropriate, you can book
          approved travel arrangements for consultants, contractors and other persons through the
          TMC. You must not book personal travel arrangements through the TMC.
1.9.3.   Where a service provider is engaged as part of a large scale activity and they have
          responsibility for the travel arrangements relating to that activity, the travel should be
          consistent with policies of the Commonwealth and this CEI.

1.10. Arrangements not covered by this CEI
1.10.1. This guidance does not apply to Parliamentarians, former Office holders or staff employed
         under the Members of Parliament (Staff) Act 1994. All queries relating to these categories
         should be referred to the Ministerial and Parliamentary Services Division, Asset
         Management and Parliamentary Services Group.

2.       Delegations and directions
2.1.1.   FMA regulation 9 and 10 as well as FMA section 44 may apply to various aspects of official
          travel. Only delegates identified in this CEI may approve official travel. Delegates should
          refer to the relevant delegation instrument and legislation for further information. In addition,
          the following responsibilities also apply:

           Position                  Responsibility
           Secretary                  Approve international official travel and travel by Deputy
                                       Secretaries.
                                      Authorise alternate approval arrangements.
                                      Prior to personally undertaking international official travel, seek
                                       approval from the Finance Minister.
           Deputy Secretaries         Approve, as appropriate, domestic official travel, including
                                       variations, for:
                                          - sponsored domestic travel;
                                          - non-SES business class domestic travel; and
                                          - variations to standard departmental travel conditions for
                                              consultants and contractors.
                                      Report, as required, official travel undertaken in their Group.
           Chief Financial            Approve the Secretary’s official travel expenditure.
           Officer                    Approve Deputy Secretaries travel acquittals (domestic and
                                       International).
                                      Administer departmental policies for the retention of supporting
                                       documentation to assist with fraud detection.




                                                    49
Position               Responsibility
FMA regulation 9        Exercise delegations in accordance with the financial framework
delegate                  and the Internal Financial Delegations Instrument.
                        Ensure that domestic official travel is approved by an
                          appropriately delegated supervising officer as follows:
                         - SES FMA regulation 9 delegates – approve airline corporate
                              lounge memberships and standard domestic travel (including
                              variations and personal travel elements).
                         - Non SES FMA regulation 9 delegates – approve standard
                              domestic travel (including variations) and domestic travel
                              acquittals in consultation with their SES supervisor.
                        SES/FMA regulation 9 delegates may also approve international
                          travel acquittals for their staff.
                        Ensure official travel by their staff is acquitted as needed.
Assistant Secretary,    Report as required on departmental travel.
Business Services       Provide advice and support to the Chief Financial Officer in
Branch                    respect of fraud detection in official travel.
                        Travel management provider arrangements.




                                     50
OFFICIAL TRAVEL - OPERATIONAL GUIDELINE 2.3

1.       General
1.1.1.   The administration (such as booking, checking invoices etc) of official travel is to be
         administered by individual Business Groups. Business Groups should:
         (a) nominate a staff member(s) to undertake the operative responsibility for the
             administration of official travel in their area (generally Executive Assistants);
         (b) ensure that all official travel is approved by an appropriate delegate prior to bookings
             being confirmed;
         (c) maintaining adequate internal controls on the use of official travel (including compliance
             with the LPB and IBF policies and that the most appropriate form of travel is utilised);
         (d) review official travel expenditure as required, including that paid for by Commonwealth
             credit cards or Cabcharge; and
         (e) ensure the booking and payment of all travel related accounts is in accordance with any
             financial framework, mandatory Whole of Government Arrangements (WoAG) and
             departmental contractual arrangements.

2.       Bookings
2.1.1.   Details of the Travel Management Company (TMC) arrangements and mandatory
         requirements are available through the Business Services Branch, COOG or the
         Department's TMC.
2.1.2.   Where the TMC arrangements do not apply, bookings should be made using a
         Commonwealth Credit Card where possible. These charges are to be acquitted by the
         travelling staff member in consultation with the cardholder.

3.       Travel expenses
3.1.     Reasonable and actual method
3.1.1.   Determining what is reasonable should be agreed between the travelling staff member and
         the delegate and reflect the level of the travelling staff member (the Travelling Allowance
         method Travel Calculator on the Intranet may assist in determining what is reasonable,
         particularly in relation to domestic travel).
3.1.2.   Staff members should access a standard of accommodation that reflects a degree of equity
         with other public servants, professionalism and value for money. A higher standard of
         accommodation may be approved by the delegate in certain circumstances, for example, if
         the staff member is travelling as part of an official party.
3.1.3.   Reasonable costs also include appropriately priced meals and modest non alcoholic/alcoholic
         beverages. Use of mini bars or similar facilities is discouraged.
3.1.4.   Where possible, payment of approved travel costs should be through the contracted TMC or
         by Commonwealth Credit Card.
3.1.5.   Staff members should not need to incur any official travel expenses personally.
         Accommodation and transportation should be booked and paid for using the departmental
         arrangements in place. If this is not possible, the staff member should be reimbursed
         reasonable costs as soon as possible. Where sufficient notice is provided, a travel advance
         for items not paid directly by the Department may be made.
3.1.6.   Travel advances (into a staff member’s bank account) are provided to staff members
         undertaking international official travel. The staff member is responsible for converting the
         advance to the currency of the destination country(s).




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3.2.     Travel allowance method
3.2.1.   Travel Allowance (TA) may apply in some instances (refer employment arrangements). TA is
         based on the determinations issued by Department of Education, Employment and Workplace
         Relations (DEEWR), available on the Intranet or through HR Services Branch. It is generally
         paid in advance of travel occurring (into a staff member’s bank account) and acquitted post
         travel.

3.3.     Meals provided
3.3.1.   Where meals are provided as a part of the official travel, staff members should not be paid or
         claim meal allowance/costs (airline meals excluded).

3.4.     Departmental credit cards and personal coincidental expenditure
3.4.1.   The Internal Financial Delegations Instrument, FMA regulation 21(2)), permits modest
         personal coincidental expenditure on Departmental credit cards, which must be repaid as
         soon as practicable. Modest coincidental expenditure would be considered to be items such
         as personal mini bar use with an official travel accommodation charge but not personal, non-
         official accommodation charges.

3.5.     Acquittals of travel advances
3.5.1.   Travel advances must be acquitted and any unspent funds (for reasonable/actual method) or
         funds in excess of entitlement (TA method) repaid to the Department within 30 days.

3.6.     Use of vehicles
3.6.1.   Where possible, Australian government vehicles (excludes Comcar but includes
         departmental/EVS vehicles) should be used for official travel. In the event that such a vehicle
         is not available, the staff member may request approval for the use of a hire vehicle (through
         any standing arrangements such as a panel) or seek the use of a taxi/cab service, whichever
         is the most cost effective.
3.6.2.   Where possible, taxis should be paid for using Cabcharge or a Commonwealth Credit Card.
3.6.3.   A staff member may utilise their personal vehicle for official travel purposes only if other
         options are not available/practical and the staff member and their SES manager agree. If
         used, appropriate insurance and registration must be held on the vehicle. Staff members
         should keep a record of the kilometres travelled. Any reimbursement of costs should be
         considered in conjunction with the conditions outlined in the Department’s employment
         arrangements (see also the mileage rate in Travel Calculator on the Intranet as a guide).

3.7.     Passports
3.7.1.   In determining whether an official passport is required, staff members should seek advice
         from the Travel Management Team, Business Services Branch, Chief Operating Officer
         Group.
3.7.2.   Official passports should be returned to the Travel Management Team when no longer
         required. The Team are to cancel or transfer (if a staff member moves to another
         Commonwealth department or agency) the passport as required.
3.7.3.   When not in use, official passports should be stored securely.

3.8.     Safety of travel documents and funds
3.8.1.   Staff members are to ensure the safety of their travel documents and funds at all times,
         reporting and investigating any loss as soon as possible.
3.8.2.   Official travel tickets are the property of the Commonwealth. If a staff member unreasonably
         or negligently delays returning (or advising of as part of their acquittal) unused, or portions of
         unused tickets or the like, they may be in breach of the FMA legislation and be required to
         reimburse the Department for costs incurred as a result.



                                                     52
3.9.      Medical arrangements for international official travel
3.9.1.    Prior to departure on international official travel, staff members should consult with their
          personal medical practitioner to discuss any necessary medical supplies and vaccinations for
          the destination country. The costs associated with such a consultation may be reimbursed.

3.10.     Requests for utilising leave, weekends, public holidays in conjunction with official
          travel
3.10.1.   All approvals (including conditions) should be recorded in writing and filed appropriately.
3.10.2.   Travel entitlements do not apply during times where a staff member takes leave during or
          extends official travel to take advantage of weekends and public holidays for personal
          reasons.
3.10.3.   No additional costs should be incurred as a result of any approval for the personal
          component. To this end, two itineraries should be prepared - one for the anticipated official
          travel on which entitlements are paid and the second for the actual travel. Any shortfalls must
          be paid by the staff member.
3.10.4.   Travel diaries substantiating business and personal components are to be kept and provided
          to the Tax Accountant, Financial Operations Branch. The completion of a travel diary assists
          in determining FBT liability for the travel undertaken.
3.10.5.   There is no scope for a delegate to approve a spending proposal for non-staff members (ie:
          family members) travelling at the same time as the staff member, unless this is part of a
          formal contractual/employment entitlement.
3.10.6.   Any FBT liability which accrues due to a personal component must be approved by the
          relevant delegate, noting that FBT implications will impact on the Department and the amount
          may appear in an individual’s Payment Summary at the end of the financial year. Travel
          diaries to substantiate business and personal components should be recorded on the
          template available on the Department’s Intranet and provided to the Tax Accountant,
          Financial Operations Branch. For further information and guidance on FBT implications, refer
          to the ‘FBT and Travel Guide’ on the Department’s Intranet.
3.10.7.   Staff members who are on leave or extend travel to take advantage of weekends and public
          holidays during official travel are not covered by workers compensation and should consider
          their own specific travel insurance needs prior to travel.

3.11. Sponsored travel and externally funded travel
3.11.1. Sponsorship by inter-governmental or international official agencies, educational institutions
        or non-profit organisations may be acceptable. Staff members must consider the source of
        the offer, its alignment with Government policies and the potential for conflict of interest.
3.11.2. Sponsored travel by staff members in a private capacity which could appear to be related to
        their official duties is not generally acceptable, regardless of whether the staff member takes
        leave. Staff should consult with their SES Manager and the Australian Public Service Code of
        Conduct to determine the appropriateness of such travel.
3.11.3. Official travel may be funded by external sources as part of an agreed business arrangement.
        Travel paid for on a fee-for-service basis or for seconded officials represents a commercial
        transaction. Any agreement entered into should reflect Commonwealth policies and ensure
        that the Department and staff members are not subject to any potential conflict of interest.
3.11.4. Where staff members undertake travel covered by funds from other organisations
        (government or private), the funding arrangements, travel conditions/entitlements and other
        relevant details should be specified in the agreement between the parties.
3.11.5. Staff members undertaking travel covered by funds from other organisations (government or
        private) should provide a report on return to the delegate (ie international travel reports should
        be submitted to the Secretary via an Executive Minute).




                                                    53
3.11.6. Travel arising from bona fide prizes or scholarships awarded to a staff member (either in a
        private capacity or under existing approved programmes, such as exchanges, study awards
        and traineeships) is not considered sponsored travel for the purposes of this guideline.

4.       Process for domestic official travel

4.1.     Domestic - Planning and preparation
4.1.1.   Official travel requires FMA regulation 9 approval (and FMA regulation 10 agreement in
         certain circumstances, ie: when hiring a vehicle, but not normally for flights or
         accommodation). Once the need to undertake official travel has been agreed in principle by
         the relevant delegate, bookings can be made.
4.1.2.   When determining the LPF, staff members must consider all flights that leave:
         (a) within 45 minutes before the latest possible outbound flight; and
         (b) within 45 minutes after the earliest possible return flight
         that will allow them to arrive at their destination.
4.1.3.   Downgrading of the class of official travel is permitted at anytime, but the reduction in cost
         cannot be used by the staff member to offset personal expenses.
4.1.4.   If a Deputy Secretary considers there is a business case to upgrade the class of travel of a
         staff member (other than for convenience or personal preference), the cost of the upgrade
         may be met by the Department. This is not a standing approval, unless there are ongoing
         medical reasons, nor it is to be considered a precedent. Details of any upgrades should be
         retained and reported to the Chief Operating Officer on request.
4.1.5.   A staff member may upgrade the class of travel assigned to them at their own personal
         expense and the difference in cost becomes payable to the Department.
4.1.6.   Requests to utilise leave, weekends or public holidays in conjunction with official travel may
         be approved at the discretion of the relevant SES financial delegate. To determine the
         amount payable two itineraries (actual and notional) should be prepared.
4.1.7.   In respect of any additional costs (ie: personal component or upgrade for personal
         convenience), the Department’s standard terms of trade are 30 days. The approving delegate
         should talk to the Accounts Processing Unit, Financial Operations Branch to ensure an
         invoice is raised for the amount owing.

4.2.     Domestic - Approval
4.2.1.   FMA regulation 9 (and 10 if applicable) approval should be obtained for all aspects of the
         travel, including fares, car hire, accommodation, estimated meal costs, excess baggage,
         lounge membership, official hospitality etc.
4.2.2.   When seeking approval, staff members should provide sufficient information so as to allow the
         delegate to confirm the business case for the travel along with whether value for money has
         been obtained (including LPF). Approval can be sought using the ‘Domestic Travel Request
         Form’ or a movement requisition (for COMCAR).
4.2.3.   Any variations to the travel should be approved by the delegate. Variations should relate to
         official needs, emergencies or circumstances beyond the control of the staff member (such as
         flight timetable changes).

4.3.     Domestic - Advances
4.3.1.   For the ‘reasonable and actual costs incurred’ method standard, staff members who provide
         sufficient notice may seek an advance for travel related costs that are not being paid for
         directly by the Department, such as meals. TA is generally paid in advance.
4.3.2.   Staff members seeking an advance must provide their bank details (if not already provided)
         and the details of the approved advance in a timely manner to the Accounts Processing Unit,
         Financial Operations Branch, to ensure that payment of the travel advance is possible.




                                                  54
4.4.     Domestic - During travel
4.4.1.   Any variations during travel should be reported and approved as part of the acquittal process.
4.4.2.   Travel diaries substantiating business and personal components are to be kept and provided
         to the Tax Accountant, Financial Operations Branch. The completion of a travel diary assists
         in determining FBT liability for the travel undertaken.

4.5.     Domestic - Acceptable travel costs
4.5.1.   Travel costs which may be paid/reimbursed by the Department (subject to appropriate
         documentation evidencing the cost(s)) include:
         (a) public transport tickets;
         (b) taxi/cab fares (use of Commonwealth Credit Card or Cabcharge card/voucher where
             possible);
         (c) toll road fees and parking costs;
         (d) medical costs (illness or accident) while travelling;
         (e) business related telephone calls;
         (f) reasonable telephone call(s) home to family;
         (g) laundry and dry cleaning (subject to the length of travel);
         (h) fax and internet (modem) costs;
         (i) photocopying costs;
         (j) excess baggage for documents and/or equipment; and
         (k) local taxes and duties.
4.5.2.   Staff members are to keep the following records of expenses for acceptable travel costs:
         (a) expenses above $82.50 (inc GST) – a valid tax invoice should be obtained;
         (b) expenses below $82.50 (inc GST) – receipts or traveller’s records; and
         (c) approvals.

4.6.     Domestic - Post travel
4.6.1.   Staff members should acquit travel within 14 working days of returning by completing a
         ‘Domestic Travel Acquittal’ form, including to confirm that the travel was undertaken as
         approved or to endorse any variations. Approvers are supervisors with FMA Regulation 9
         delegation and the Chief Financial Officer in the case of Deputy Secretaries.
4.6.2.   Where the staff member was required to pay for personal aspects of the travel (ie: personal
         component or upgrade for convenience), the receipt should be attached to the acquittal.
4.6.3.   Where an advance is in excess (unspent funds - reasonable/actual method or funds in excess
         of entitlement - TA method), these funds need to be repaid within 30 days. The delegate
         approving the acquittal should talk to the Accounts Processing Unit, Financial Operations
         Branch to ensure an invoice is raised for the amount owing.
4.6.4.   Staff members seeking reimbursement should provide the delegate with a completed
         ‘Accounts Payable’ form attaching: the ‘Domestic Travel Acquittal’ form, receipts and copies
         of relevant approvals.
4.6.5.   In the event that a Commonwealth Credit Card was used, this is to be acquitted by the
         cardholder through the normal ICMS processes and any personal coincidental expense
         incurred repaid as soon as practicable (as per the directions in the Internal Financial
         Delegations Instrument, FMA regulation 21(2)).
4.6.6.   The staff member should, if requested, submit a Briefing Report to the delegate that approved
         the travel.
4.6.7.   Where a travel diary was required to be maintained, the original diary with a copy of the
         approved acquittal form should be sent to Tax Accountant, Financial Operations Branch.

5.       Process for official international travel

5.1.     International - Planning and preparation



                                                   55
5.1.1.   Official international travel requires approval from the Secretary unless the Secretary has
         authorised alternative approval arrangements. Prior to approaching the Secretary for
         approval under FMA regulation 9 and/or 10, staff members should seek in principle
         agreement from the relevant Deputy Secretary (through the First Assistant Secretary as
         required). Requests should be submitted to the Secretary using the ‘International Travel
         Request’ template (see Approval below).
5.1.2.   In planning to undertake international official travel, staff members must consider all
         appropriate Commonwealth policies including, in relation to air travel, IBF. When determining
         the IBF, staff members must consider all flights that leave:
         (a) within 24 hours before the latest possible outbound flight; and
         (b) 24 hours after the earliest possible return flight; and
         (c) in addition to the cost of any travel component, staff members are to consider any
              additional accommodation, meals, ground transport, and incidental costs associated with
              the 24 hour windows for calculation of the IBF.
5.1.3.   If the IBF is not obtained, staff members are to document the reasons and include it with the
         request to the Secretary/Approver.
5.1.4.   Staff members are to ensure that they have appropriate visa and passport documentation for
         the destination country and consult with Business Services Branch as needed.
5.1.5.   Downgrading of the class of official travel is permitted at anytime, but the reduction in cost
         cannot be used by the staff members to offset personal expenses.
5.1.6.   A staff member may upgrade the class of travel assigned to them at their own personal
         expense and the difference in cost becomes payable to the Department.
5.1.7.   Requests for utilising leave, weekends or public holidays in conjunction with official travel may
         be approved at the discretion of the Secretary/Approver. No additional costs may be incurred.
         To determine the amount payable, two itineraries (actual and notional) should be prepared.
5.1.8.   Any FBT liability which accrues due to a personal component must be approved by the
         relevant delegate, noting that FBT implications will impact on the Department and the amount
         may appear in an individual’s Payment Summary at the end of the financial year. Travel
         diaries to substantiate business and personal components should be recorded on the
         template available on the Department’s Intranet and provided to the Tax Accountant,
         Financial Operations Branch.
5.1.9.   In respect of any additional costs (ie: personal component or upgrade for personal
         convenience), the Department’s standard terms of trade are 30 days. The travelling staff
         member should talk to the Accounts Processing Unit, Financial Operations Branch to raise an
         invoice for the amount owing.

5.2.     International - Approval
5.2.1.   The Secretary’s FMA regulation 9 approval should be sought using the ’International Travel
         Request’ template or a similar format where an alternate delegate has been authorised to
         approve international travel. Approval should be obtained for all anticipated aspects of the
         travel, including fares, car hire, accommodation, estimated meal costs, excess baggage,
         lounge membership, funding partners, official hospitality (refer CEI 2.4 – Official Hospitality)
         etc.
5.2.2.   When seeking approval, staff members should provide sufficient information so as to allow the
         delegate to confirm the business case for the travel along with whether value for money has
         been obtained (including IBF).
5.2.3.   Approval should be sought for any variations prior to the travel, generally by sending an email
         to the Secretary/Approver.

5.3.     International - Advances
5.3.1.   Following approval, staff members may seek an advance for travel related costs, such as
         meals, not being paid for directly by the Department.



                                                    56
5.3.2.   Staff members who are provided an advance that includes the conduct of official hospitality
         should ensure they record the details on the ‘Statement of Representational Allowance’ form.
5.3.3.   Staff members seeking an advance must provide their bank details (if not already provided)
         and the details of the approved advance in a timely manner to the Accounts Processing Unit,
         Financial Operations Branch, to ensure that payment of the travel advance is possible.

5.4.     International - During travel
5.4.1.   Any variations should generally be reported and approved as part of the acquittal process.
5.4.2.   Staff members are to keep the following records:
         (a) receipts or equivalent;
         (b) approvals; and
         (c) a travel diary (certifying travel undertaken, travel advances, personal incidental expenses
              etc).

5.5.     International - Acceptable travel costs
5.5.1.   Travel costs which may be paid/reimbursed by the Department (subject to appropriate
         documentation evidencing the cost(s)) include those applicable for domestic travel along with
         the following:
          (a) pre-travel medical costs;
          (b) visa fees and other official travel documentation costs;
          (c) travellers’ cheque fees;
          (d) special clothing for harsh climates and conditions; and
          (e) tips and gratuities, when customary and within acceptable levels of the country.

5.6.     International - Post travel – acquittals and reports
5.6.1.   International travel acquittals should be approved by the staff member’s SES supervisor (FMA
         regulation 9 delegate) or the Chief Financial Officer in the case of Deputy Secretaries.
5.6.2.   Staff members should acquit travel within 14 working days of returning by completing an
         ‘International Travel Acquittal’ form, even if it is just to confirm that the travel was undertaken
         as approved or to endorse any variations. This should generally be attached to the Briefing
         Report.
5.6.3.   Where the staff member was required to pay for personal aspects of the travel (ie: personal
         component or upgrade for convenience) the receipt should be attached to the acquittal.
5.6.4.   Where an advance is in excess (unspent funds - reasonable/actual method), those funds
         need to be repaid within 30 days. The delegate approving the acquittal should consult with
         the Accounts Processing Unit, Financial Operations Branch to ensure an invoice is raised for
         the amount owing.
5.6.5.   Staff members seeking reimbursement should provide the FMA regulation 9 delegate with a
         completed ‘Accounts Payable’ form attaching the ‘International Travel Acquittal’ form, receipts
         and copies of relevant approvals.
5.6.6.   In the event that a Commonwealth credit card was used, this is to be acquitted by the
         cardholder through the normal ICMS processes and any personal coincidental incurred repaid
         as soon as practicable (as per the directions in the Internal Financial Delegations Instrument,
         FMA regulation 21(2)).
5.6.7.   The staff member should, unless advised otherwise by the delegate/Approver, submit a
         Briefing Report to that delegate/Approver (ie the Secretary for international travel) within
         14 days of returning. Where staff members participate in an international management
         program, a more substantial report is to be provided within four weeks.
5.6.8.   Where a travel diary was required to be maintained, the original diary with a copy of the
         approved acquittal form should be sent to Tax Accountant, Financial Operations Branch.




                                                     57
6.       Controls
6.1.1.   Controls in relation to the undertaking of official travel include:
         (a) approval levels, delegate accreditation and certificate of compliance reporting;
         (b) documentation requirements (including decisions);
         (c) public reporting obligations; and
         (d) internal and external audits.

7.       Reference topics
7.1.     Key references

          Legislation                    Financial Management and Accountability Act 1997
                                         Financial Management and Accountability Regulations 1997
                                         Members of Parliament (Staff) Act 1994
          Finance Circular               2009/03 – Grants and other Common Financial
                                          Arrangements
                                         2009/04 – Grants: Reporting Requirements
                                         2009/11 – Best Fare of the Day for International Official Air
                                          Travel
                                         2011/01 – Commitments to Spend Public Money (FMA
                                          Regulations 7 to 12)
                                         2012/04 - Use of the Lowest Practical Fare for Official
                                          Domestic Air Travel
          CEIs/Operational               2.4 - Official Hospitality
          Guidelines                     5 - Commonwealth Credit Cards
          Templates/Forms                Accounts Payable form
                                         International Travel Request template (SecCorro)
                                         International Travel Acquittal form
                                         Domestic Travel Request form
                                         Domestic Travel Acquittal form
                                         Travel Diary Requirements guidelines and Template (Mar
                                          2012) (Travel diary can be used for domestic travel)
                                         Statement of Representational Allowance
          Other                          Australian Public Service Values and Code of Conduct
                                         Departmental Travel Cost Calculator
                                         Intranet – Air Travel Services
                                         FBT and Travel Guide (Mar 2012)
                                         Whole of Australian Government (WoAG) Travel Fact Sheet.

7.2.     Key contacts

          Branch                          Contact for Assistance on:
          Procurement Assistance         This CEI and Operational Guideline.
          and Financial Policy           Internal Delegations.
          Team, Financial
          Services Branch
          HR Services Branch,            Employment arrangements, including travelling allowance,
                                          DEEWR rates and reasonable and actual method.
          Business Services              Application of WoAG travel policy in the Department, in
          Branch                          particular, TMC arrangements and LPF and IBF.
                                         Visa and official passports.
                                         Lounge memberships.
          Treasury, Taxation and         Credit cards.
          Asset Management               FBT liabilities.
          Team, Financial
          Operations Branch,



                                                   58
Branch                    Contact for Assistance on:
Accounts Processing      Establishing staff members payment facilities.
Unit, Financial          Payment of travel advances, acquittals and personal
Operations Branch         elements or funds outside of entitlement.
Hotline: 6215 3766       Cabcharge.
Secretary’s Office       International travel requests (not acquittals).




                                  59
OFFICIAL HOSPITALITY (INCLUDING ENTERTAINMENT, W ORKING LUNCHES AND
GIVING GIFTS) - CHIEF EXECUTIVE INSTRUCTION 2.4 (V4 – 07/2012)

1.      General

         Official hospitality generally involves the use of public resources to provide hospitality to
         persons other than staff members to facilitate the achievement of one or more
         Commonwealth policy objectives. Official hospitality may include the provision of
         refreshments, entertainment, gifts, sponsorship, prizes or other benefits.

         For instructions relating to the gifting of public property, see CEI - Managing Public
         Property.

         INSTRUCTIONS – all staff
             You must not enter into an arrangement to provide official hospitality, unless:
                   - you have been delegated the authority, or authorised by a delegate, under
                       section 44 of the FMA Act; and
                   - the requirements of FMA Regulations 7-12 have been met (see instructions
                       on “Approving Spending Proposals and Entering into Arrangements” in this
                       CEI).
             You must act in accordance with the CPRs when procuring goods or services to
               provide official hospitality (see CEI - Procurement).
             Any decision to spend public money on official hospitality must be publicly
               defensible and represent a proper use of Commonwealth resources.
                                                                      Whole of Government Model CEI Provision




1.1.1. Official hospitality does not include expenses that only benefit staff members, this is classified
        as entertainment.
1.1.2. Business Groups should retain a register to record the conducting and receiving of official
        hospitality.

2.      Approvers
2.1.1. Approvers (as outlined under Delegates and Directions in this CEI), should ensure that a
       request to conduct or receive hospitality:
       (a) facilitates the achievement of one or more Commonwealth policy objectives;
       (b) is recorded on the relevant Business Group Official Hospitality Register.
2.1.2. Approvers should ensure that a request to conduct or receive hospitality or conduct staff
       functions:
       (a) has costs that are reasonable and appropriate based on attendees and anticipated
            outcome;
       (b) represents an efficient, effective, economical and ethical use of public money; and
       (c) has appropriate documentation to justify its undertaking.
2.1.3. The following applies in respect of approving activities:
       (a) all expenditure for internal functions must be approved at First Assistant Secretary level;
       (b) all official hospitality must be approved at Deputy Secretary level;
       (c) public monies will not be used to purchase alcohol for departmental functions except with
            approval from a Deputy Secretary (with the exceptions for the Chief Finance Officer and
            Social Club President as set out in section 7); and
       (d) rewards and recognition expenses are to be approved at First Assistant Secretary level.


                                                   60
2.1.4. Where possible, approvers should not approve official hospitality from which they will benefit
        directly. However, where this occurs, care should be taken to ensure the approval would
        withstand public scrutiny.

3.      Offering gifts or benefits
3.1.1. Gifting of public money is not permitted unless it is money (to be treated as special public
       money) collected as a charity donation or raised for a charity through fund raising activities,
       such as a raffle or BBQ, as detailed in the related Operational Guideline.
3.1.2. Expenditure on minor gifts of a protocol or public relations nature are acceptable when the
       presentation of such a gift is to further the aims/outcomes of the Department and will not
       create an undesirable precedent for the Commonwealth, as are items relating to staff
       rewards/recognition or Social Club activities, as detailed in the related Operational Guideline.

4.      Code of conduct
4.1.1. At all times, you are to adhere to your obligations under the Australian Public Service Code of
        Conduct, including the responsible service or acceptance of alcohol.

5.      Receiving gifts or benefits
5.1.1. Where you receive an offer of hospitality gift or benefit, you should follow the procedures in
        CEI 10.1 - Acquiring Public Property (Incorporating Accepting Gifts and Benefits).

6.      Arrangements not covered by this CEI
6.1.1. This guidance does not apply to Parliamentarians, former Office holders or staff employed
        under the Members of Parliament (Staff) Act 1994. All queries relating to these categories
        should be referred to the Ministerial and Parliamentary Services Division, Asset Management
        and Parliamentary Services Group.

7.      Delegations and directions
7.1.1. FMA regulation 9 and 10 as well as FMA section 44 may apply to various aspects of official
        hospitality. Only delegates identified in this CEI may approve elements of official hospitality.

         Position                      Responsibility
         Secretary                     Where agreed, provide written approval for official hospitality
                                       relating to:
                                             Ministers and Parliamentary Secretaries;
                                             Chief Executives of other public sector agencies, or
                                             High ranking Officials/representatives from the public
                                                and/or private sector.
                                       This includes the provision of alcohol at functions where it is
                                       considered appropriate.

                                       Approve the use of public money to purchase minor gifts of a
                                       protocol/public relations nature where it furthers the
                                       aims/outcomes of the Department and will not create an
                                       undesirable precedent.
         Chief Financial Officer       Where agreed, provide written approval for official hospitality
         (CFO)                         relating to the Secretary. This includes alcohol where it is
                                       considered appropriate.
         Deputy Secretaries            Where agreed, provide written approval for official hospitality in
                                       instances excluding those that are approved by the
                                       Secretary/CFO.

                                       Ensure that the Business Group Official Hospitality Register is
                                       current.



                                                   61
Position                      Responsibility
Secretary                     Where agreed, provide written approval for official hospitality
                              relating to:
                                    Ministers and Parliamentary Secretaries;
                                    Chief Executives of other public sector agencies, or
                                    High ranking Officials/representatives from the public
                                       and/or private sector.
                              This includes the provision of alcohol at functions where it is
                              considered appropriate.

                              Approve the use of public money to purchase minor gifts of a
                              protocol/public relations nature where it furthers the
                              aims/outcomes of the Department and will not create an
                              undesirable precedent.
Chief Financial Officer       Where agreed, provide written approval for official hospitality
(CFO)                         relating to the Secretary. This includes alcohol where it is
                              considered appropriate.
Secretary and Deputy          Approve the purchase of alcohol for official hospitality or staff
Secretaries                   functions
First Assistant Secretaries   Where agreed, provide written approval for all expenditure for
                              internal functions.

                              Approve the provision of certain, modest, benefits for staff as a
                              reward/recognition.
SES                           Approve the use of public money to purchase minor gifts of a
                              protocol/public relations nature where it furthers the
                              aims/outcomes of the Department and will not create an
                              undersirable precedent (unless the nature of the gift/recipient
                              indicates approval should be sought from the the Secretary).
Social Club President         Where agreed, provide written approval for expenditure for
                              functions organised by the Social Club. This includes alcohol
                              where it is considered appropriate.

                              Ensure that money collected as a charity donation (special
                              public money) is passed to the charity it was collected for and is
                              not used for any other purpose. (Refer Social Club Procedures
                              Manual).

                              Approve the purchase of gifts and benefits related to social club
                              activities for Departmental employees, their family and friends
                              to the value of $250 (inc GST).




                                          62
OFFICIAL HOSPITALITY (INCLUDING ENTERTAINMENT , W ORKING LUNCHES AND
GIVING GIFTS) - OPERATIONAL GUIDELINE 2.4

1.      General
1.1.1. Due care and diligence must always be exercised by staff members when providing official
       hospitality.
1.1.2. The use of public money for official hospitality purposes can be done through:
       (a) formal occasions hosted by the Minister(s) or Secretary; and
       (b) informal hospitality provided by the Minister(s), Secretary or staff members.

2.      Official hospitality
2.1.     Types of official hospitality
Official hospitality involves parties external to the Department and most often external to the
Commonwealth.
2.1.1. The following forms of official hospitality are acceptable to be undertaken:
         (a) hosting overseas visitors, members of the diplomatic, consular Corps or members of the
              press where the Government has an interest;
         (b) reciprocal entertainment while on interchange programs;
         (c) working lunch type events for existing or potential clients and business contacts;
         (d) conferences or seminar expenses involving existing or potential business clients
              (including entertaining a visiting speaker or presenter who provides professional services
              for a conference, seminar or workshop); or
         (e) promotional functions involving existing or potential business clients, including the
              provision of prizes/sponsorships.
2.1.2. Functions may be hosted by the Secretary, their spouse or other senior SES, normally in a
         departmental or public venue. Where the function is held in a staff member’s home,
         reimbursement may be claimed for reasonable out of pocket expenses. Expenses may
         extend to the spouse of the staff member but not to other members of the host family.
2.1.3. Official hospitality does not include:
         (a) expenses that only benefit staff members (refer Section 4);
         (b) travel for a visiting speaker;
         (c) refreshments for meetings of staff from other Commonwealth agencies (e.g. biscuits, tea
             and coffee for networking events).

2.2.    Hospitality involving Ministers
2.2.1. Where hospitality relates directly to activities of the Department, it is to be funded from the
        Department’s operating funds, even if Ministers attend.
2.2.2. The range of events hosted and funded by the Department, but with Ministerial
        representation, may include:
        (a) formal, large occasions involving overseas visitors and/or ministers from the States and
             Territories;
        (b) formal official functions catering to private sector representatives or advisory council
             meetings;
        (c) overseas events hosted by staff members of the Department and attended by the
             Minister or by the Minister and staff of the Minister’s office;
        (d) smaller scale formal functions held at the parliamentary dining room, at a public venue or
             within departmental premises; or
        (e) informal hospitality for visitors or persons who are in attendance to conduct business
             related to the portfolio (eg: a working lunch or refreshments in the Minister’s office).




                                                   63
2.2.3. Official hospitality extended by the Department within Australia, on behalf of the Minister, is to
       be charged to the specific ministerial hospitality account.
2.3.   Conducting hospitality
2.3.1. When determining whether to conduct official hospitality, the following factors should be
       considered:
       (a) the potential of the event to facilitate the achievement of one or more Commonwealth
            policy objectives;
       (b) whether any obligations or expectations may arise as a result;
       (c) the scale of the official hospitality;
       (d) the intention of the official hospitality;
       (e) whether the event would create an inappropriate impression; and
       (f) whether offering the official hospitality could withstand public scrutiny.
2.3.2. The level of acceptable expenditure is determined by applying the ‘reasonableness and
       appropriateness’ test, along with what would be considered publicly defensible.
2.3.3. As with all other expenses incurred by the Department, expenses which provide some type of
       benefit to staff will need to be considered reasonable and appropriate.

2.4.     Approval to conduct hospitality
2.4.1.   As financial delegate approval cannot be obtained retrospectively, staff members should
         obtain in principle agreement where they may be required to conduct official hospitality,
         particularly in respect of international official travel.
2.4.2.   If the official hospitality to be arranged involves:
         (a) Ministers, Parliamentary Secretaries, Chief Executives of other public sector agencies, or
              high-ranking Officials/representatives from the public and/or private sector, the
              Secretary’s written approval is required;
         (b) the Secretary, the written approval of the Chief Financial Officer is required; or
         (c) in other instances, the written approval of a Deputy Secretary is required based on the
              nature of the hospitality.
2.4.3.   Where possible, a staff member should not approve official hospitality if they will benefit
         directly. If this occurs, care should be taken to ensure the approval would withstand public
         scrutiny. In considering a request to conduct official hospitality, the delegated staff member
         must ensure that the FMA legislation is adhered to, and consider whether:
         (a) the request and need to conduct the official hospitality is in accordance with the policies
               of the Department and the Commonwealth; and
         (b) the conduct of the official hospitality equates to an efficient, effective, economical and
               ethical use of public money.
2.4.4.   Where the timing or location prevents prior approval, documentation is then to be produced, in
         accordance with normal endorsement processes, at the earliest opportunity.
2.4.5.   Approval can be sought using the ‘Request to Conduct Certain Activities (Official Hospitality,
         Working Lunch, Entertainment, Meetings, Conferences, Reward and Recognition).

2.5.   Acquittal
2.5.1. Official hospitality should be acquitted by the managing/travelling staff member by:
       (a) completing the ‘Statement of Representation Allowance’ form (for hospitality during
            international travel) or completing a minute documenting the details; and
       (b) ensuring that any unspent funds are returned to the Department through the Petty Cash
            Advance Holder or Accounts Processing Unit, Financial Operations Branch, COOG;
            and/or
       (c) processing any accounts for payment, attaching details and receipts to an ‘Accounts
            Payable form’ and submit to delegated approver before sending the form to Accounts
            Processing Unit, Financial Operations Branch, COOG.




                                                   64
2.5.2. In completing an acquittal, the staff member must ensure that appropriate and sufficient
         documentation is kept. Such documentation includes:
         (a) the Business Group Official Hospitality Register;
         (b) approvals of requests for official hospitality; and
         (c) approvals of acquittals with supporting documents.

2.6.     Records
2.6.1.   Areas undertaking official hospitality are to keep a full set of records on their Business
         Group’s Official Hospitality Register.

2.7.     Entertainment/working lunches
2.7.1. Expenditure on entertainment/working lunches may be charged to official hospitality where:
       (a) a full day's meeting has been scheduled with external representatives and there is a cost
            advantage in continuing the meeting through the normal lunch break;
       (b) the meal is attended by persons from at least one other public or private agency and
            there are clear advantages for the Department in achieving Commonwealth policy
            objectives during the meal time; or
       (c) it is necessary to reciprocate hospitality towards members of either the public or private
            sector.
2.7.2. Working lunches should generally be at a work/meeting location, be of a simple standard
       involving a relatively low cost per head and generally not involve the consumption of alcohol.
       Elaborate meals involving a relatively higher cost per head will be subject to Fringe Benefits
       Tax, as will any meals that involve alcohol.

2.8.     Internal Functions
2.8.1. Before approving a request, consideration must be given by the delegate (refer CEI 2.1.3) to
         whether the expenditure is reasonable and demonstrates an efficient, effective, economical
         and ethical use of Commonwealth resources (Section 44 of the FMA Act) and whether the
         expenditure will withstand public scrutiny.
2.8.2.   Examples of the types of events or occasions that may be considered reasonable would
         include:
         (a) Light refreshments for morning/afternoon tea following presentations to recognise
              achievements (e.g. Finance or Group staff forums);
         (b) Sandwiches, finger food, non-alcoholic drinks for lunchtime presentations or meetings;
         (c) End of project team lunch in recognition of particularly hard work (reward & recognition) at
              a modest restaurant or café (no alcoholic beverages provided at the Department’s
              expense); refer also Section 4.
         (d) Retirement and graduation functions;
         (e) SES functions.
2.8.3.   Internal functions, entertainment and reward & recognition events may attract Fringe Benefits
         Tax. Details should be provided to the Tax Accountant, Treasury, Taxation and Assets
         Management Team, Financial Operations Branch, COOG.
2.8.4.   CEI 6.4 – Taxation Obligations should be referred to for confirmation of any taxation
         conditions (such as FBT) that may apply.

2.9.     Events or Occasions involving Alcohol
2.9.1.   Alcohol should not be purchased at departmental expense for staff events, meetings or
         forums. This includes SES functions and meetings with other associates which do not fall into
         Official Hospitality. Exceptions to this would be corporate events that are specifically
         designed to promote social activities across the Department and which have been approved
         by the Secretary including:
          (a) the Finance Ball (noting this is partially subsidised through ticket sales);



                                                    65
          (b) the departmental Christmas Party (noting this is partially subsidised through ticket sales),
               and
          (c) departmental Happy Hours (primarily subsidised through drink sales).
2.9.2.   Before approving a request for the purchase of alcohol, consideration must be given by the
         delegate (refer CEI 2.1.3) to whether the expenditure is reasonable and demonstrates an
         efficient, effective, economical and ethical use of Commonwealth resources (Section 44 of the
         FMA Act) and whether the expenditure will withstand public scrutiny.
2.9.3.   Alcohol purchases should be the exception rather than the rule keeping in mind that the
         Department promotes responsible consumption of alcohol.
2.9.4.   Official Hospitality may include an alcohol component.
2.9.5.   Where the purchase of alcohol is approved, expenditure should be reasonable both in price
         and quantity giving consideration to the efficient, effective, economical and ethical use of
         Commonwealth resources.
2.9.6.   Incidental expenditure on alcohol as part of another purchase should be approved by the
         relevant delegate for the main purchase. Examples of incidental expenditure include a
         conference ticket where an alcoholic beverage is included with your meal.
2.9.7.   Further, when travelling, OG 2.3 Official Travel 3.1.3 provides for “modest non-
         alcoholic/alcoholic beverages” to be consumed with meals. Expenditure on alcohol while on
         official travel should be approved by the respective travel delegate.
2.9.8.   Expenditure for events or occasions which involve the consumption of alcohol may attract
         Fringe Benefit Tax. Details should be provided to the Tax Accountant, Treasury, Taxation
         and Assets Management Team, Financial Operations Branch.
2.9.9.   CEI 6.4 – Taxation Obligations should be referred to for confirmation of any taxation
         conditions (such as FBT) that may apply.

2.10. Expenditure and FBT
2.10.1. Fees for staff members attending seminars, courses, conferences and workshops would not
        be a charge against official hospitality.
2.10.2. Official hospitality charges may be split across cost centres.
2.10.3. Expenditure for ministerial hospitality is to be included in the Department’s Fringe Benefit Tax
        (FBT) Return. Whenever the Minister approves such expenditure, a return for Fringe Benefits
        Tax purposes will need to be obtained from the Minister’s office.
2.10.4. Expenditure for small scale entertainment which involves consumption of alcohol has a fringe
        benefit element and so there will be an FBT liability.
2.10.5. CEI 6.4 – Taxation Obligations should be referred to for confirmation of any taxation
        conditions (such as FBT) that may apply to official hospitality.

3.       Sponsorship by the Department
3.1.1.   Any sponsorship proposal should be considered as part of the budget process and within the
         framework of the strategic plan. By doing so, it should ensure an equitable assessment of all
         potential beneficiaries within the ambit of the Department’s objectives.
3.1.2.   In managing the process for approved sponsorship arrangements, staff members should also
         consider CEI 4 – Grants.

4.       Provision of gifts or staff benefits (including Reward &
         Recognition)
4.1.1.   Official hospitality does not include expenses that only relate to staff members. Such
         expenses may include:
         (a) awards for achievements of excellence;
         (b) small gifts to recognise long serving or retiring staff, including flowers;
         (c) functions to farewell officials being posted offshore, or transferring or retiring;
         (d) functions and meals involving only staff members;



                                                    66
         (e) conferences, seminars and workshops of the Department; or
         (f) memberships to professional bodies, which have relevance to the Department.

4.2.     Staff benefits / Reward & Recognition
4.2.1.   The provision of certain, modest, benefits (as above) to staff may be appropriate from time to
         time. Staff members are to ensure that the provision of a benefit is reasonable, publically
         defensible and approved by a First Assistant Secretary, with the exception of the social club
         where the Social Club President has authority to approve gifts up to the value of $250 (refer
         Section 4.4).

4.3.     Offering gifts
4.3.1.   The offer of a gift or benefit requires careful judgment, because with it comes the possible
         perception of undue benefit or conflict of interest. The Public Service has a reputation for
         integrity and professionalism which is, in part, based on the community belief that a staff
         member employed by the Commonwealth must not be influenced by bribes or benefits.
4.3.2.   Staff members may make a gift of public property where it was acquired to use as a gift,
         including Social Club prizes up to a value of $250 (inc GST) refer FMA subsection 43(c).
         Where the reason for the gifting lapses (ie: an anticipated visit by a foreign delegate is
         cancelled) and the gift cannot be used in a timely manner for another, similar purpose, the
         item should be treated as public property for the purposes of FMA section 43(b) (refer CEI 10
         – Managing Public Property).
4.3.3.   Expenditure on minor gifts of a protocol or public relations nature is acceptable when the
         presentation is to further the aims of the Department. Items may include calendars or diaries.
4.3.4.   If the recipient of a proposed gift is a foreign national, foreign organisation or foreign
         Government, the delegate must be satisfied of the appropriateness of the proposed gift before
         the gift is approved. The Department of Foreign Affairs and Trade may be contacted for
         advice on the appropriateness of the proposed gift (inquiries may be sent via email to
         Financial.Management@dfat.gov.au). Generally gifts offered should preferably be of an
         Australiana or relevant Departmental theme, made in Australia and should not be of
         excessive value.
4.3.5.   To obtain approval to purchase a gift staff members are to submit a request to their SES
         manager (or the Secretary depending the intended recipient) which contains sufficient detail
         so as to allow them to make a decision about whether to approve the offer of a gift.
4.3.6.   If approved, when offering a gift, staff members are to ensure that it is made clear that the gift
         is presented on behalf of the Secretary of the Department (and not a personal gift from the
         staff member).
4.3.7.   If a gift of public property (ie: not procured as a gift) is to be provided, staff members should
         follow the requirements (including delegations) relating to gifting public property under FMA
         section 43 - refer CEI 10 – Managing Public Property.

4.4.     Gifts and benefits provided by the Social Club
4.4.1.   The Social Club President has the authority to provide gifts and benefits related to social
         activities to Departmental employees, their family and friends to the value of $250. The gifts
         and benefits may include:
         (a) items purchased to be won as prizes at social events;
         (b) items purchased to be raffled with the proceeds going to a charity; and
         (c) items donated to be raffled with the proceeds going to charity (before accepting
              donations, the departmental policies on probity and conflicts of interest should be
              considered).
4.4.2.   The provision of certain gifts or benefits must be considered reasonable and appropriate.




                                                    67
4.4.3.     Staff members are to ensure that the agreement of the Secretary is obtained if the value of
           the proposed gift or benefit is over $250. The request should outline potential Fringe Benefits
           Tax implications for individuals receiving the gift or benefit.

5.         Controls
5.1.1.     Controls in relation to the conduct of official hospitality include:
           (a) financial delegation levels, accreditation and certificate of compliance reporting;
           (b) formal request and acquittal processes;
           (c) official hospitality registers supported by documentation (including decisions); and
           (d) internal and external audits.


6.         List of Common Expenditure and Its Treatment
         Description of Expense                            Type of                  Approver
                                                           Expenditure
         Ministerial Hospitality                           Official Hospitality –   Secretary
                                                           Ministerial Account

         Hospitality relating to the Secretary             Official Hospitality     Chief Financial
                                                                                    Officer
         Hospitality relating to a Deputy Secretary        Official Hospitality     Secretary

         Hosting overseas visitors, members of the         Official Hospitality     Deputy Secretary
         diplomatic, consular Corps or members of the
         press where the Government has an interest
         Reciprocal entertainment while on                 Official Hospitality     Deputy Secretary
         international and/or interagency exchange
         programs
         Working lunch type events for existing or         Official Hospitality     Deputy Secretary
         potential clients and business contacts
         Promotional functions involving existing or       Official Hospitality     Deputy Secretary
         potential business clients, including the
         provision of prizes/sponsorships
         Gift for a visiting speaker                       Official Hospitality     First Assistant
                                                                                    Secretary
         Travel for a visiting speaker                     Same as related          Same as related
                                                           event                    event
         Refreshments for meetings of staff from other     Meetings and             First Assistant
         Commonwealth agencies (e.g. biscuits, tea         Conference               Secretary
         and coffee for networking events).                Expenses
         Working lunch type events involving other         Meetings and             First Assistant
         APS staff                                         Conference               Secretary
                                                           Expenses
         Light refreshments for morning/afternoon tea      Meetings and             First Assistant
         following presentations to recognise              Conference               Secretary
         achievements (e.g. Finance or Group staff         Expenses
         forums)
         Sandwiches, finger food, non-alcoholic drinks     Meetings and             First Assistant
         for lunchtime presentations or meetings           Conference               Secretary
                                                           Expenses
         Group/Branch offsites                             Meetings and             First Assistant
                                                           Conference               Secretary
                                                           Expenses
         End of project team lunch in recognition of       Reward and               First Assistant
         particularly hard work at a modest restaurant     Recognition              Secretary
         or café – no alcohol purchased at
         departmental expense.




                                                      68
       Description of Expense                           Type of                Approver
                                                        Expenditure
       Retirement and graduation functions. No          Reward and             First Assistant
       alcohol purchased at departmental expense.       Recognition            Secretary
       SES/EL2 functions with light refreshments,       Meetings and           First Assistant
       no alcohol purchased at departmental             Conference             Secretary
       expense.                                         Expenses
       Expenditure on Alcohol associated with an        Dependant on           Deputy Secretary
       event. Note: Once alcohol is included, ALL       nature of event
       costs for the event need to be approved by
       Deputy Secretary.
       Attendance at seminars, courses,                 Training, L&D, as      Assistant Secretary
       conferences and workshops                        appropriate
       Staff awards for achievements of excellence      Reward and             First Assistant
                                                        Recognition            Secretary
       Small gifts to recognise long serving or         Reward and             First Assistant
       retiring staff, including flowers                Recognition            Secretary
       Memberships to professional bodies, which        Memberships            Assistant Secretary
       have relevance to the Department
       The Finance Ball                                 Entertainment and      Social Club
                                                        other staff benefits   President
       The Departmental Christmas Party                 Entertainment and      Social Club
                                                        other staff benefits   President
       Social Club expenses, including Happy Hour       Entertainment and      Social Club
       and Prizes                                       other staff benefits   President


7.      References
7.1.    Key references

          Legislation                  Financial Management and Accountability Act 1997
                                       Financial Management and Accountability Regulations 1997
                                       Fringe Benefits Tax Assessment Act 1986
                                       Members of Parliament (Staff) Act 1994
                                       Public Service Act 1999
          CEIs/Operational             2.3 – Official travel
          Guidelines                   6.4 – Taxation Obligations
                                       10 – Managing Public Property
          Templates/Forms              Statement of Representational Allowance (pending) (Official
                                        Hospitality during international travel)
                                       Request to Conduct Certain Activities (Official Hospitality,
                                        Working Lunch, Entertainment, Meetings, Conferences,
                                        Reward and Recognition)
          Other                        Tax Ruling IT/2675 FBT Entertainment.
                                       FBT & Entertainment Guide (March 2012)
                                       Australian Public Service Values and Code of Conduct in
                                        Practice (Gifts and Benefits).
                                       Finance Social Club Procedures Manual

7.2.    Key contacts

          Branch                        Contact for Assistance on:
          Treasury, Taxation           FBT matters associated with official hospitality.
          and Asset
          Management Team,
          Financial Operations



                                                   69
Branch                       Contact for Assistance on:
Branch
Accounts Processing          Payment of accounts, advances and acquittals.
Unit, Financial
Operations Branch
Procurement                  This CEI and Operational Guideline.
Assistance and               Internal Delegations.
Financial Policy Team,
Financial Services
Branch
Portfolio Coordination       Ministerial hospitality account.
Unit, Portfolio
Coordination and
Communications
Branch




                                        70
CEI/OG 3 - PROCUREMENT
INTRODUCTION
Introduction pending release of model CEI.

Instances of Non Compliance

All instances of non-compliance with the FMA legislation, CPRs and these CEIs/Operational
Guidelines are to be reported to the relevant SES manager for inclusion in the periodic Business
Group Certificate of Compliance reporting. Non-compliance with internal requirements, while not
externally reportable, provide an opportunity for remedial action to be taken where needed. Penalties
may apply for non-compliance with FMA legislation (refer: FMA legislation and the Public Service Act
1999).


PROCUREMENT - CHIEF EXECUTIVE INSTRUCTION 3 (V2 – 07/2012)

1.       General
1.1.1.   This CEI will be updated and re-issued in full when the Whole of Australian Government
         model CEI is released. Staff must have regard to the Commonwealth Procurement Rules
         (CPRs) and related policies, the following Operational Guidelines as well as other
         requirements (delegations, other CEIs/Operational Guidelines etc) when undertaking
         procurement.

2.       Delegations and directions
2.1.1.   Refer to CEI 2 – Committing to Spend Public Money, the FMA legislation, the Financial
         Management and Accountability (Finance Minister to Finance Secretary) Delegation
         Instrument and the Internal Financial Delegations Instrument for delegations and directions.
2.1.2.   In addition, the following applies:

          Position                    Responsibility
          Secretary                    Approve procurements that cannot be valued.
                                       Direct, in writing, that details of a contract or standing offer not
                                         be published on AusTender, where they would be exempt under
                                         the Freedom of Information Act 1982.
          Chief Financial Officer      Publish an APP by 1 July each year on AusTender.
                                       Ensure the department complies with legislative and other
                                         external reporting requirements relating to procurement.
          Procurement Assistance       Ensure the department’s internal processes and policies assist
          and Financial Policy,          staff to comply with legislative and other external reporting
          Financial Services             requirements relating to procurement.
          Branch (Procure|Assist)      Administer departmental requirements in AusTender.
          Financial delegates / All    Comply with the requirements of the CPRs, CEIs/Operational
          staff                          Guidelines and related legislation.
                                       Ensure all contracts entered into of $10,000 (inc GST) or above
                                         and all consultancy contracts (regardless of value) are entered
                                         into the Financial Management Information System (FMIS)
                                         (SAP) so that reportable contract details may be published on
                                         AusTender within 42 days of the arrangement being entered into
                                         or varied (as mandated in the CPRs).




                                                   72
PROCUREMENT – OPERATIONAL GUIDELINE 3

1.       General
1.1.1.   Achieving value for money is the core rule of the CPRs. Value for money in procurement
         requires:
         (a) encouraging competitive and non-discriminatory processes;
         (b) using Commonwealth resources in an efficient, effective, economical and ethical manner
             that is not inconsistent with the policies of the Commonwealth1;
         (c) making decisions in an accountable and transparent manner;
         (d) considering the risks; and
         (e) conducting a process commensurate with the scale and scope of the procurement.
1.1.2.   The procurement thresholds (inc GST) are:
         (a) $80,000 for procurements other than construction services; and
         (b) $9 million for construction services.

2.       Factors impacting on procurement option undertaken
2.1.1.   You should ensure that:
         (a) you are informed of the policies that apply to procurement (a list of Procurement
              Connected Policies can be accessed on the Department’s website);
         (b) procurements are undertaken in accordance with the requirements in the CPRs, the
              CEI’s and Finance’s internal procedures;
         (c) where mandated, Whole of Australian Government (WoAG) arrangements are used for
              procurements unless an exemption has been provided (by the Finance Minister or as
              permitted by the specific arrangement);
         (d) non-mandatory WoAG panel arrangements or multi-use lists are used where appropriate,
              and
         (e) where required, open tender processes are to be utilised for procurements at or above
              the relevant thresholds unless the CPRs permit a prequalified or limited tender or
              provides an exemption and it would be appropriate to use such an approach.
2.1.2.   In determining an appropriate procurement method regardless of the value, you should select
         the procurement method (ie: open tender, prequalified tender or limited tender) that offers
         greater value for money.

3.       Procurement processes
3.1.1.   All procurements are to comply with Division 1 of the CPRs regardless of their value or
         whether an exemption applies to them.
3.1.2.   Division 2 of the CPRs outline additional rules that must be followed for procurements at or
         above the relevant procurement threshold and where an exemption in accordance with
         Appendix A of the CPRs does not apply.
3.1.3.   To determine the total value of a procurement, you must include:
         (a) all forms of remuneration, including any premiums, fees, commissions, interest,
              allowances and other revenue streams that may be provided for in the proposed
              contract;
         (b) the value of the goods and services being procured, including the value of any options in
              the proposed contract; and
         (c) any taxes or charges.
3.1.4.   You are to ensure that procurement risk assessments are undertaken as appropriate.


1
  This reflects the requirement in section 44 of the FMA Act that a Chief Executive must manage the affairs of
the agencies for which they are responsible in a way that promotes the proper use of Commonwealth resources.


                                                      73
3.1.5.   You are to ensure that business, expert, legal or probity advice is sought where the value,
         complexity or sensitivity of the procurement indicates this would be appropriate.
3.1.6.   Where template contracts are not used or are changed outside the parameters of the
         template guidance, legal advice should be obtained.
3.1.7.   The CPRs outline the minimum time limits that apply for lodging submissions and all potential
         suppliers are required to lodge in accordance with a common deadline. Late submissions
         must not be accepted unless the submission is late as a consequence of mishandling by the
         Department.
3.1.8.   Approvals under the FMA legislation should be in accordance with the relevant CEI, in
         particular CEI 2 – Committing to Spend Public Money.

4.       Reviews
4.1.1.   Where external advisers are used for Whole of Australian Government or significant/sensitive
         procurement processes and provide pre-release and probity clearances, the reviews
         generally performed by areas within the Department (such as pre-release reviews by
         Procure|Assist) are not required. In contracting with external providers for such services, staff
         are to ensure the interests of the Commonwealth are protected.

5.       Accountability, transparency and reporting
5.1.1.   In conducting procurement on behalf of the Commonwealth, you are to ensure the
         appropriate standards of probity throughout the process.
5.1.2.   Staff must maintain documentation for each procurement. The appropriate detail of
         documentation should be commensurate with the scale, scope and risk of the procurement.
         Documentation should provide accurate and concise information on:
         (a) the requirement for the procurement;
         (b) the process that was followed;
         (c) how value for money was considered and achieved; and
         (d) relevant decisions, including under the FMA Regulations, and the basis of those
              decisions.
5.1.3.   In addition, you must have appropriate documentation with the supplier, such as a written
         contract or purchase order.
5.1.4.   To meet transparency obligations, you are to ensure that appropriate reporting and handling
         of a procurement activity has occurred. This includes meeting AusTender, Annual Report and
         Senate Order reporting requirements.

5.2.     Annual Procurement Plan
5.2.1.   An Annual Procurement Plan (APP) must be published by 1 July each year on AusTender.
         Entries of planned procurements can be updated, added or deleted throughout the year.
         Procurements published in the APP for at least 30 days (and not more than 12 months) have
         the benefit, when needed, of allowing a shorter time in the market.

6.       Arrangements not covered
6.1.1.   This guidance does not apply to Parliamentarians, former Office holders or staff employed
         under the Members of Parliament (Staff) Act 1994. All queries relating to these categories
         should be referred to the Ministerial and Parliamentary Services Division, Asset Management
         and Parliamentary Services Group.

7.       Commonwealth Procurement Rules and related policies
7.1.1.   There are eight key areas that staff members must follow relating to:
         1.    Obtaining value for money;
         2.    Going to the open market for all procurements of $80,000 (inc GST) or above ($9m for
               construction) inc GST, unless another procurement method or exemption applies;



                                                    74
         3.      Non-discrimination;
         4.      Allowing a minimum of 25 days to respond, with some exceptions;
         5.      Advertising all open tenders on AusTender;
         6.      Not receiving late submissions, unless the department is at fault;
         7.      Reporting of contracts awarded (at $10,000 or above) on AusTender; and
         8.      Mandatory use Whole of Australian Government (WoAG) arrangements, in particular
                 co-ordinated procurements.

8.       Procurement channels
8.1.1. These steps are outlined using the following channels, linking the WoAG requirements with
         internal process and delegation requirements.

          Very Simple Procurements          Basic Procurements          Standard Procurements
           Under $80,000 (inc GST)         Under $80,000 (inc GST)        $80,000 (inc GST) or
                                                                                   above
                                                                        ($9 million construction)
                     Guidance                      Guidance                      Guidance
                      Checklist                     Checklist                     Checklist
                     Templates                     Templates                     Templates
                              Number of quotes – Demonstrating value for money
              Good practice to get three,   Good practice to get three,   Open approach to the
               unless other provisions       unless other provisions      market required unless
                       apply.                        apply.                 another method or
                                                                            exemption applies.
                                          Documentation requirements
                   Key decisions                 Key decisions              Full documentation

8.1.2.   Standard procurements are those that are at or above the relevant threshold for the
         purposes of the CPRs.
8.1.3.   The criteria for following the very simple procurement process is that it should be:
         (a) non ICT;
         (b) not a procurement to engage a consultant;
         (c) very low risk;
         (d) not requiring FMA Regulation 10 approval, but may fall under FMA Regulation 10A;
         (e) not requiring a formal contract to protect the interests of the Commonwealth (ie: no
              intellectual property, licensing, warranty requirements); and
         (f) not a procurement from a standing offer (ie: panel) or WoAG arrangement.
8.1.4.   Standing offer arrangements automatically form a contract when the work order or similar is
         agreed to between the parties. WoAG arrangements are generally panel arrangements or
         have purchasing procedures that are to be followed by agencies, once entered into.
8.1.5.   The guidance provided on the Procure|Assist Portal will suit most procurement processes. If
         in doubt, staff should contact Procure|Assist.

9.       Process requirements
9.1.1.   The following outlines internal policy and process requirements, providing a link between the
         requirements of the CPRs and other legislation with the processes, systems and delegations
         within the department. These requirements are incorporated into the procurement channel
         guides on the Procure|Assist Portal.

         Step 1: Plan the procurement based on an identified need
          Step 1:
             Determine the objectives for the procurement.
             Detail a clear scope of requirements.
             Consult Procure|Assist for advice were appropriate.


                                                  75
              Seek specialist advice, where appropriate.
              Research the market to understand capabilities and restraints.
              Ensure probity arrangements are considered where appropriate.
              Document relevant decisions and justifications relating to the procurement.
              Understand and incorporate Australian Government transparency requirements.

                                                Reference: Whole of Australian Government Procurement Internet


9.2.     Agree the need
9.2.1.   In the initial phase of the procurement process it is important to identify the need, ensuring the
         objectives are clear, and have this agreed by the staff member’s manager/delegate. Such an
         agreement may be verbal or documented where a more formal case needs to be considered
         before resources are committed to pursuing the proposal.

9.3.     Obtain your procurement registration number (PRN)
9.3.1.   Staff members should register their procurement, even if it is just in the initial planning stage
         and may not proceed. Registering procurements will allocate a unique number, a PRN, which
         aids Procure|Assist in providing support and advice (as needed) throughout the procurement
         process.
9.3.2.   On AusTender, the PRN is also the Pre Release Notice (if used) and it becomes the
         approach to market (ATM) number when the procurement is to be published.

9.4.     Procurement plans
9.4.1.   The procurement plan should:
         (a)     reflect the value, length and nature of the spending proposal;
         (b)     outline applicable policy considerations (including risks and consistency with
                 Government policies); and
         (c)     demonstrate how the proposal will facilitate the ‘proper use’ of public money.
9.4.2.   Consideration is to be given as to the extent to which funding is available to cover the entire
         spending proposal (including multi-year proposals and contingent liabilities).
9.4.3.   Spending proposals that involve notional payments, such as a Memorandum of
         Understanding (MOU) between agencies, should be treated as if they involve real payments
         (as required by section 6 of the FMA Act).

9.5.     Seeking specialist advice
9.5.1.   Staff members are to ensure that business, expert, legal or probity advice is sought where the
         value, complexity or sensitivity of the procurement indicates this would be appropriate.
         Where possible this should be from within the department or, if this is not feasible, through
         private sector professionals with the requisite skills and experience. Specialist advisors may
         be a member of the tender evaluation team or provide advice to the team.

9.6.     Probity, transparency and recordkeeping
9.6.1.   Staff should apply due diligence and probity throughout all procurement processes.
         Information about ethics and probity in procurement can be found in Buying for Government
         and the Australian National Audit Office (ANAO) Better Practice Guide – Fairness and
         Transparency in Decisions.

9.7.     Tender evaluation team
9.7.1.   The tender evaluation team should be comprised of members with relevant skills and, where
         appropriate, representative of the key stakeholders.
9.7.2.   For procurements of a sensitive or high risk nature, the inclusion of an external representative
         on the tender evaluation team is encouraged. The representative may be from another
         Business Group, where it is appropriate, but where the proposal indicates, consideration



                                                    76
         should be given to engaging a representative who is totally independent and external to the
         department.

9.8.     Conflicts of interest
9.8.1.   When forming a tender evaluation team, staff members should ensure members declare any
         potential conflicts of interest at the beginning of the process and provide updates to the chair
         of the evaluation team should this status change during the life of the process. Depending on
         the nature of the conflict staff should refer to CEI 10.1 - Acquisition of Public Property
         (Incorporating Accepting Gifts and Benefits) and/or contact Legal Services Branch (LSB).

9.9.     Public works
9.9.1.   Public works costing in excess of $15 million are to be referred to the Parliamentary Standing
         Committee on Public Works. The Committee must also be advised of all works with
         estimated costs between $2 million and $15 million, known as medium works.

         Step 2: Scope the procurement
          Step 2:

              Determine whether the goods or services to be purchased are subject to coordinated
               procurement arrangements that must be used.

              Determine if the agency already has a panel or multi-use list could be used.

              Consider whether there are opportunities for cooperative agency procurement.

                       o Undertake detailed research of the market if appropriate
             Estimate the value of the procurement – this must be done.
             Where procurements are unable to be valued or reliably valued, they must be treated
              as if they are over the relevant threshold.
             Unless a specific exemption applies, agencies must comply with Division 2 of the
              CPRs when the procurement activity is above the relevant thresholds.

                                                Reference: Whole of Australian Government Procurement Internet


9.10. Procurement sources
9.10.1. Refer to the Smart Buying tab on the Procure|Assist Portal for information on mandatory
        arrangements, standing offers and things to consider when planning a procurement.
9.10.2. Areas planning to establish a standing offer, multi use list (MUL) cooperative arrangement or
        panel should confirm there is a business need and cost benefit first and liaise with
        Procure|Assist to discuss the process to use.

9.11. Valuing a procurement
9.11.1. The expected value of a procurement must be estimated before a decision on the
        procurement method is made. The expected value is the maximum value (inc GST) of the
        proposed contract, including options, extensions, renewals or other mechanisms that may be
        executed over the life of the contract.
9.11.2. The maximum value of a procurement must include:
        (a) all forms of remuneration, including any premiums, fees, commissions, interest,
            allowances and other revenue streams that may be provided for in the proposed
            contract;
        (b) the value of the goods or services being procured, including the value of any options in
            the proposed contract; and
        (c) any taxes or charges.




                                                    77
9.11.3. Where a procurement is to be conducted in multiple parts with multiple contracts awarded
        either at the same time or over a period of time, with one or more suppliers, the estimated
        value of the goods or services being procured must include the estimated total maximum
        value of all of the contracts.
9.11.4. Procurements must not be divided for the purpose of avoiding a procurement threshold.
9.11.5. Where staff are unable to estimate the value of the goods and/or services being procured it
        must be treated as being valued above the relevant threshold ($80,000 (inc GST)/$9 million
        (inc GST) for construction services) and the rules in Divisions 1 and 2 of the CPRs followed.
9.11.6. The delegate for approving procurements that cannot be valued is the Secretary. It should be
        noted that this requirement does not capture procurements for setting up purchasing
        frameworks such as panels or multi-use lists. Establishment of such arrangements may be
        approved by an FMA regulation 9 delegate at a level appropriate to the
        risk/sensitivity/significance of the arrangement. Normal FMA approval requirements apply to
        procurements from such arrangements.

9.12. Research and interaction with potential suppliers
9.12.1. Generally contact with potential suppliers should be in accordance with the Procurement
        Plan. If contact with potential suppliers is required during the earlier steps of a procurement,
        before a plan is complete, it should generally only occur if other sources have not been able
        to provide the information required. All potential suppliers should be dealt with fairly and in a
        non-discriminatory manner. Staff contacting a potential supplier should make it clear about
        the reason for the contact and that no commitment is being made.
9.12.2. Staff may enquire if Government discounts would apply if an order was placed, or if there
        would be discounts for quantities or prepayments. Any proposal that includes a discount or
        prepayment should comply with the requirements outlined in Finance Circular 2004/14 -
        Discounts for prepayment and early payment.

        Step 3: Determine the procurement method
         Step 3:
         Open Tender
           Involves a one-stage (ie Request for Tender), open approach to the market.
           Is the ‘default’ for all procurements valued at or above the relevant thresholds
            ($80,000 (inc GST) for non construction and $9 million (inc GST) for construction
            services for FMA Act agencies)
           Must be advertised on AusTender.
         Prequalified Tender
            Involves a procurement from:
                    o A shortlist of potential suppliers that responded to an initial open approach
                         to market on AusTender. The initial approach is generally referred to as
                         an Expression of Interest;
                    o a list of potential suppliers selected from a multi-use list established
                         through an open approach to market;
                    o a list of all potential suppliers that have been granted a specific licence or
                         comply with a legal requirement, where the licence or compliance with
                         the legal requirement is essential to the conduct of the procurement.
         Limited Tender
            Involves procurement based on quotes being sought directly from one or more
             potential suppliers.
            Can be undertaken for any procurement under the relevant thresholds where it
             represents value for money.
            Can only be used for procurements above the relevant thresholds in accordance with
             10.3 of the CPRs, or where a procurement is exempt as detailed in Appendix A of the
             CPRs. The value and reasons for the Limited Tender must be documented.




                                                   78
                                                Reference: Whole of Australian Government Procurement Internet


9.13. Number of quotes
9.13.1. All procurements are to demonstrate value for money and quotes should be sought
        accordingly. For very simple and basic procurements good practice is to get three quotes,
        unless other requirements apply such as in respect of the legal services panel. The default
        for procurements of $80,000 (inc GST) and above is generally an open approach to the
        market.
9.13.2. Written quotes should generally be sought or at a minimum be confirmed in writing with the
        potential supplier (ie: confirming email).

        Step 4: Prepare to approach the market
         Step 4:
            Put in place appropriate governance arrangements (refer 9.14).
            Prepare tender evaluation plan and request documentation, that appropriately
             incorporate Procurement Connected Policies.
            Seek delegate clearance / approval to approach the market.

                                                Reference: Whole of Australian Government Procurement Internet


9.14. Governance arrangements
9.14.1. Governance arrangements are to be put in place to ensure that a procurement process is
        conducted soundly and that related actions are documented, defensible and substantiated in
        accordance with legislation, Government and internal policy. A Procurement Plan is designed
        to assist in this regard. It should be approved by the relevant FMA Regulation 9 delegate,
        prior to approaching the market and provides the delegate with information required to
        approve the procurement project moving forward. Procurement Plans should generally
        include:
        (a) procurement outcomes;
        (b) identification of stakeholders;
        (c) the procurement method to be used;
        (d) evaluation criteria;
        (e) risk assessment;
        (f) a probity plan; and
        (g) an evaluation plan.

9.15. Risk Assessments
9.15.1. Staff must establish processes for the identification, analysis, allocation and treatment of risk
        when conducting a procurement. The effort directed to risk assessment and management
        should be commensurate with the scale, scope and risk of the procurement. Staff should
        consider risk and their potential impact when making decisions relating to value for money
        assessments, approvals of proposals and spend public money and the terms of the contract..
        Consideration of risk should be documented on the file and included in requests for approval.
        Refer to CEI 1.1 – Managing Risk.

9.16. Request documentation
9.16.1. Where external providers are not preparing the request documentation (refer also 4.1.1), staff
        should generally consult with Procure|Assist to determine the appropriate
        templates/checklists and procurement guidance. LSB should be contacted in respect of the
        most appropriate contract.
9.16.2. In developing request documentation staff should take care in setting any conditions for
        participation or the language used (differentiating between what is desirable, essential, where




                                                    79
        a potential supplier may, should or must). It is important to ensure that the requirements are
        designed to achieve the desired outcomes and not limit requirements or opportunities.
9.16.3. Complementing this policy, Procure|Assist should generally be identified within the
        Procurement Plan, formally identifying the assistance they may need to provide throughout
        the life of the process.
9.16.4. Staff members may also consider the Australian National Audit Office’s Better Practice Guide
        ‘Developing and Managing Contracts 2011-12‘ for guidance on the development and
        management of contracts.

9.17. Procurement connected policies
9.17.1. The CPRs set obligations in relation to procurement process requirements and structures,
        transparency dealing with potential suppliers, tenderers and suppliers and ethical behaviour.
        There are also procurement connected policies that must be applied as required relating to,
        amongst other things:
        (a) confidentiality;
        (b) WoAG coordinated procurement;
        (c) employment and workplace relations and international obligations;
        (d) the environment;
        (e) the financial framework;
        (f) industry participation and social inclusion;
        (g) information, communications and technology;
        (h) legal;
        (i) privacy and security;
        (j) records management; and
        (k) transparency.
9.17.2. In planning an approach to market and developing the request documentation and contracts
        in particular, staff need to be aware of how their procurement will interact with procurement
        connected policies and ensure these are addressed. Some specific process guidance has
        been developed that staff should have regard to, including:
         (a) the construction code of practice;
         (b) environmental purchasing (incorporating process checklists and case studies), including
             the packaging covenant;
         (c) intellectual property; and
         (d) industry participation plans, including ICT.

9.18. Arrangements with persons outside the Commonwealth or other agencies
9.18.1. The requirements outlined in the CEI and Operational Guideline for Arrangements with
        Persons Outside the Commonwealth or Arrangements with Other Agencies should be
        followed when developing request documentation that relates to outsiders or other
        government agencies.

9.19. Agreement to proceed
9.19.1. An ‘agreement to proceed’ should be sought from an FMA regulation 9 delegate prior to
        approaching the market. If the proposal is likely to be multi-year and/or contain a contingent
        liability, this should be discussed in the request to approach the market.
9.19.2. For procurements under $80,000 (inc GST), where the nature/risk associated with the
        procurement does not require a procurement plan (ie: very simple procurements), agreement
        to proceed and the formal FMA regulation 9 approval may occur at the same time but must be
        in place before any arrangement is entered into.
9.19.3. Written agreement should generally be sought or at a minimum be confirmed in writing with
        the FMA delegate (ie: confirming email).




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9.20. Advertising your procurement
9.20.1. All open tenders must be published on AusTender. In addition, they may be advertised in the
        press, in accordance with the provisions for Australian Government Advertising. (Any details
        advertised through the press must be the same as those published on AusTender).

9.21. Advising the Secretary/Executive Board (EB) of a planned procurement
9.21.1. It is expected that in a Branch, if not more broadly, there will be an awareness of planned
        procurements as they generally form a part of the area’s business planning and budgeting
        processes and be reflected in planning tools as appropriate, such as the Departmental Capital
        Plan or the Annual Procurement Plan.
9.21.2. You should consider whether senior managers, including the Secretary should be advised of
        the procurement depending on its sensitivity or risk prior to publishing any information.
9.21.3. Where appropriate, an all SES email notification should also be sent.

        Step 5: Approach the market
         Step 5:
            Notify the market – for open tenders this involves (as a minimum), publishing the
              opportunity on AusTender[         ].
             For open and prequalified tenders, ensure the minimum time requirements of the
              CPRs are met.
             Include essential information (eg. closing time, lodgement mechanism, evaluation
              criteria and methodology, process rules, contact officer and the possibility of an
              industry briefing, site visit, and/or mid-term review) in the request documentation to
              enable suppliers to develop and lodge competitive and compliant submissions.
             Include a draft contract and statement of compliance in the request documentation.
             Use appropriate limitation of liability and standard contract clauses where available.
             Do not use unnecessary mandatory language (i.e. ‘must’, ‘will’), jargon and acronyms
              from the request documentation.
             Ensure clarifications or additional materials are made available to all potential
              suppliers in a timely and equitable manner.
             Do not materially change the evaluation plan after the opening of submissions.

                                              Reference: Whole of Australian Government Procurement Internet


9.22. AusTender pre-release review of request documentation
9.22.1. Other than where an external adviser has been engaged to develop request documentation,
        Procure|Assist undertake pre-release checks before the request documentation is published
        on AusTender. Staff should allow Procure|Assist with as much time as possible for the review
        to be undertaken. If Procure|Assist is conflicted or the nature of the procurement is
        significant/sensitive, LSB or Office of Chief Audit Executive (OCAE) will be consulted.
9.22.2. Procure|Assist (or LSB/OCAE where applicable) may issue advice regarding the pre-release
        check and any matters of note prior to publishing the request documentation.
        Recommendations will be made if required – either to address non-compliance or suggest
        better practice. It is expected that if recommendations are not adopted, the reasons why are
        documented and noted by the FMA delegate.

9.23. Preparation of request documentation not released on AusTender
9.23.1. Procurements not released on AusTender, such as those from a panel, are still required to
        follow procurement processes and achieve value for money. Staff members should use the
        relevant Procurement Checklist to ensure the correct procedure is followed. Where there
        have been material departures from the checklist or the procurement is significant/sensitive,
        staff should arrange for a pre-release check to be undertaken by Procure|Assist.

9.24.   AusTender



                                                  81
9.24.1. AusTender publishing and closing is administered by Procure|Assist.
9.24.2. A request for tender can be published on AusTender, even if it is not an open approach.
9.24.3. Staff members should provide Procure|Assist with notice of impending approaches to market
        to load request documentation and, where possible, provide request documentation in
        sufficient time so as to allow the publishing onto AustTender within standard working hours.
9.24.4. When forwarding request documentation for publishing on AusTender staff members should:
        (a) ensure the request documentation is complete;
        (b) confirm that agreement to approach the market has been given by the FMA delegate;
        (c) provide a completed AusTender loading form with the request documentation; and,
        (d) where a pre-release check is not completed by Procure|Assist, provide confirmation from
             the external provider that the request documentation meets the requirements of the
             CPRs and related legislative requirements.

9.25. Minimum time requirements
9.25.1. The CPRs stipulate that subject to limited exceptions, potential suppliers must be given at
        least 25 days to prepare and lodge a submission.
9.25.2. For procurements published in the Annual Procurement Plan for at least 30 days and not
        more than 12 months in advance of the approach to market, the 25 day period can be
        reduced to a minimum of 10 days. Staff should contact Procure|Assist to discuss options,
        particularly if a shorter timeframe is required and the procurement has not been published in
        the Annual Procurement Plan.
9.25.3. For more complex procurements it may be appropriate to allow more than the minimum time
        in order for potential suppliers to provide viable submissions.

9.26. Clarifications and interaction with potential suppliers (including industry briefings)
9.26.1. The process to follow while tenders are open and during the evaluation process should be
        that documented in the Procurement Plan (where applicable), in particular interaction with
        potential suppliers and tenderers. If in doubt, staff should consult Procure|Assist.
9.26.2. For procurements that are not open approaches to market or not published on AusTender (ie:
        by email or letter), it is considered better practice for staff members to ensure the requests
        are received – either by phone call to the supplier or a confirming email/letter of receipt from
        the potential supplier.

9.27. Issuing addenda
9.27.1. Once confirmed that an addenda is required and the details approved by the tender
        evaluation team chair, the AusTender Addenda form should be completed and forwarded to
        Procure|Assist for publishing onto AusTender. Staff should provide Procure|Assist with as
        much notice as possible. Better practice is not to issue addenda too close to the closing date.
9.27.2. For procurements not using AusTender, the issuing of addenda or clarifications should be
        treated with care to ensure all potential suppliers are given the same information at a similar
        time.
9.27.3. Care should be taken in setting the cut-off for issuing addenda, ensuring potential suppliers
        have time to respond to changes. Generally one week is better practice, however, this should
        be considered on a case by case basis.

9.28. Submissions closing
9.28.1. For standard procurements or basic procurements using AusTender to publish the request
        documentation, the method for closing and receiving submissions is electronic, through
        AusTender (between 10am and 4pm on working days). Physical lodgement of submissions
        through the Procure|Assist Tender Box is by exception only (closing at 2pm on Tuesdays or
        Thursdays).




                                                  82
9.28.2. AusTender requires three designated staff members (generally Procure|Assist staff) to open
        the electronic tender box. Probity requires at least two staff members (generally
        Procure|Assist staff) to be present for the opening of the physical Procure|Assist Tender Box.
        For submissions received by a Tender Officer directly (generally, submissions under the
        procurement thresholds), it is better practice is to have at least two staff members present
        when opening the submissions, although this will depend on the significants, sensitivity and/or
        level of risk.
9.28.3. Late submissions must not be accepted, unless the lateness is due solely to mishandling by
        the Department. This should also apply to processes relating to procurements under the
        thresholds. Late submissions are to be returned to the tenderers who should be advised that
        the submission was rejected due to lateness.

        Step 6: Evaluate submissions and conclude the tender process
         Step 6:
            Deal with unintentional errors in submissions in accordance with the CPRs.
            Deal with late submissions in accordance with the CPRs.
            Ensure the procurement process is/was fair, equitable and will stand up to scrutiny,
             including that the evaluation is conducted in accordance with the Tender Evaluation
             Plan.
            Ensure the process is consistent with the CPRs, including in relation to handling
             complaints.
            Undertake a financial viability assessment(s) of the preferred supplier(s) if necessary.
            Provide sufficient documentation and information to the delegate to enable them to
             make an informed decision.
            Obtain delegate approval (i.e. FMA Regulation 8 and 9 and 10 if applicable) and two
             signed copies of the contract (one for the agency, the other for the service provider).
            Advise unsuccessful tenderers and provide debriefs where requested.
             Report contracts valued at $10,000 (inc GST) or above on AusTender[             ].

                                              Reference: Whole of Australian Government Procurement Internet


9.29. Open/receipt of submissions
9.29.1. Following the opening of the Tender Box Procure|Assist will provide the nominated staff
        member (Tender Officer) within the respective business group access to the submissions.
        Where submissions are provided directly to the business area (ie: where the approach to
        market is not through AusTender), the Tender Officer should take care to ensure the process
        of receiving and recording submissions is conducted in a transparent manner that ensures the
        integrity, fairness and impartiality of the tendering process.
9.29.2. The Tender Officer will arrange for submissions to be made available to the chair of the
        tender evaluation team, and the members where necessary.
9.29.3. Submissions will not be made available to the Tender Officer before an evaluation plan has
        been finalised and approved by an appropriate delegate. This is a fundamental probity
        requirement.

9.30. Evaluate submissions
9.30.1. The assessment of submissions is to be a fair comparison; conducted in accordance with the
        approved procurement/evaluation plan and the requirements set out in the request
        documentation, in particular the statement of requirement and evaluation criteria.
        Consideration is also to be given to due diligence checks such as reference checks, site visits
        and financial viability assessments, where such activities are permitted by the request
        documentation.
9.30.2. Evaluations should be conducted by those with relevant skills and knowledge appropriate to
        the value, complexity, risk and importance of the procurement. Any conflicts of interest
        should be declared and resolved.



                                                  83
9.30.3. Security standards apply to procurement processes. Discussions of the evaluation team
        should be confidential – this may be accommodated through the use of meeting rooms where
        the nature of the process indicates this is required. Submissions should be secured in
        accordance with departmental security policy. All material (electronic or physical) is to be
        stored in a manner that limits access on a need to know basis and to parties identified in the
        Procurement Plan.

9.31. Who the Government can contract with
9.31.1. There are certain parties/entities that the Government should not contract with. To check
        staff should contact LSB.

9.32. Due diligence and financial viability
9.32.1. Due diligence and financial viability checks should be undertaken as appropriate throughout
        the life of an arrangement ensuring protection of the Commonwealth’s interests. Staff should
        contact LSB who have access to information that will assist in assessing these.

9.33. Evaluation report review
9.33.1. Other than where an external adviser is responsible for the evaluation report, Procure|Assist
        (LSB/OCAE if conflicted) may undertake a review of the draft, where the nature of the
        procurement indicates this would be appropriate. This requirement will generally be advised
        by Procure|Assist. Procure|Assist (or LSB/OCAE) may issue advice regarding the review and
        any matters of note. Recommendations will be made if required – either to address non-
        compliance or prompt better practice. It is expected that if recommendations relating to non-
        compliance are not adopted, the reasons why are documented and noted by the FMA
        delegate.

9.34. Delegate decision support
9.34.1. To demonstrate to the delegate that the appropriate process has been followed and to
        support their consideration of the value for money proposition in the proposal, a copy of the
        Procurement Checklist can be attached to requests for approval. The checklist should
        capture the process that has been undertaken and document any material departures.

9.35. Approval of the spending proposal (FMA regulation 9 and 10)
9.35.1. Formal FMA regulation 9 approval, with FMA regulation 10 agreement if needed, should be
        sought as part of concluding the tender evaluation process and before the contract is signed.
9.35.2. Staff should not enter into an arrangement (under FMA section 44) unless the spending
        proposal has been approved under FMA regulation 9 and, if necessary, agreement has been
        given under FMA regulation 10.
9.35.3. When establishing a panel or multi-use list approval under FMA regulation 9 is required (no
        value needs to be attributed), with individual purchases made from them requiring FMA
        regulation 9 approval. FMA regulation 10 in respect of contingent liabilities may be sought for
        the overarching arrangement.
9.35.4. In addition, if an outsider is being engaged that may receipt, hold or make payments using
        public money they need to be given written authorisation. Please refer to CEI Chapters 7.1
        and 8 for further information.

9.36. Entering into an arrangement, including contingent liabilities
9.36.1. All arrangements, including where public money is not payable, must comply with relevant
        legislative requirements and must have appropriate measures in place to protect the
        Government’s interests.
9.36.2. Where accepting a contingent liability or considering limiting a potential supplier’s liability staff
        should follow the guidance in 2003/02 – Guidelines for Issuing and Managing Indemnities,



                                                     84
          Guarantees, Warranties and Letters of Comfort and 2006/03 – Limited Liability in Information
          and Communications Technology Contracts.
9.36.3.   Before entering into an arrangement the FMA section 44 delegate should confirm that
          approval has been obtained under FMA regulations 9 and 10 (as needed), and that any
          contingent liability is covered by the Department’s Comcover Insurance arrangements, if
          required. Staff should contact OCAE in this respect.
9.36.4.   If FMA section 44 delegate decides to authorise another staff member to enter into
          arrangements on their behalf, written documentation (ie: email, written authorisation) should
          be maintained evidencing the authorisation.
9.36.5.   When not using WoAG/Departmental contract templates or purchase orders, legal advice
          should be sought on the form of contract.
9.36.6.   Staff members should ensure that documentation on entering into the contract is stored on
          file, and that appropriate steps are undertaken to ensure that any reporting or publishing
          requirements for a contract, agreement or arrangement are managed.

9.37. Confidentiality and access to information
9.37.1. Submissions must be treated as confidential before and after the award of a contract. Once a
        contract has been awarded he terms of the contract, including parts of the contract drawn
        from the tenderer’s submission, are not confidential unless Finance has determined and
        identified in the contract that specific information is to be kept confidential in accordance with
        the guidance on Confidentiality throughout the Procurement Cycle at
        www.finance.gov.au/procurement.
9.37.2. Confidentiality of information should be considered on a case by case basis. Staff should
        note that any agreed confidentiality provisions are reportable on AusTender (refer to the
        Senate Continuing Order on Contracts). Staff should make note when reportable
        confidentiality provisions apply as this information included when the contract details are
        entered into the FMIS (SAP).

9.38. Finalise/execute contract
9.38.1. For procurements valued at $80,000 (inc GST) or above a formal contract should be agreed
        and entered into, usually in the form of the draft provided in the request documentation.
9.38.2. The contract should generally address:
        (a)    start and end dates of the contract, extension options;
        (b)    protection of the Commonwealth’s interests, including Intellectual Property;
        (c)    roles and expectations of both parties, in particular the outcomes to be achieved;
        (d)    timeframes and milestones;
        (e)    warranties and other conditions;
        (f)    arrangements for delivery and payment;
        (g)    dispute resolution strategies, including remedies available for non delivery of the
              contracted goods or service;
        (h)    managing ongoing relationships between the department and the supplier; and
        (i)    risk management, including determining which party manages each risk.

9.39. Contract reporting
9.39.1. The Secretary has the authority to direct, in writing, that details of a contract or standing offer
        not be reported on AusTender, where they would be exempt under the Freedom of
        Information Act 1982. Documentation of reasons for valid non-reporting is to occur in all
        cases.
9.39.2. Staff should advise senior management of any matter relating to disclosure or other
        sensitive/high risk issues prior to reporting any information.
9.39.3. The staff member performing the role of procurement officer is to ensure that all consultancies
        and other contracts of $10,000 (inc GST) or above are entered into SAP and a purchase



                                                    85
        order raised. In completing the form and providing it to the entry person (generally Executive
        Assistants), care should be taken to ensure the information is correct as it forms the basis of
        all contracts reporting – including public reporting requirements. Information should be
        entered into the FMIS (SAP) within one week of the contract being entered into to assist in
        meeting the requirements of reporting the contract details on AusTender.
9.39.4. Unless exempt, contracts of $10,000 (inc GST) or above must be reported on AusTender
        within 42 days of the arrangement being entered into or amending such arrangements. Non-
        compliance with this rule must be reported in the Department’s Certificate of Compliance.
        The details reported on AusTender are based on the contract information entered into SAP by
        staff.
9.39.5. Regardless of the value, standing offers must be reported on AusTender within 42 days of the
        department entering into or amending such arrangements. Relevant details in the standing
        offer notice, such as supplier details and the names of other agencies participating in the
        arrangement, must be reported and kept current.
9.39.6. The purchase order is used to track expenditure and, if there is no formal contract in place,
        forms the contract with the supplier.

9.40. Debriefs and unsuccessful notices
9.40.1. All tenderers who have made submissions must be promptly notified of the final procurement
        decision and must be given the opportunity of a tender debrief. To assist, better practice is to
        capture this information in the evaluation report (ie: one page summary for each tenderer).
9.40.2. Debriefs must also be made available, on request, to successful supplier(s).

9.41. Complaints
9.41.1. Complaint handling is to be fair, equitable and non-discriminatory.
9.41.2. In the first instance, if a complaint is received the aim is to achieve conciliation through the
        procuring area’s ‘chain of command’. Where the issue cannot be resolved staff should seek
        assistance from Procure|Assist.

Step 7: Manage the contract
         Step 7:
            Develop a contract management plan to assist the agency to understand and
             implement obligations under the contract.
            Assess contract extension options on a value for money basis in accordance with the
             terms of the contract.
            Ensure compliance with the Small and Medium Enterprise 30 Day Payment Policy.
            Appropriately consider and, as appropriate, issue contract variations.

                                                Reference: Whole of Australian Government Procurement Internet


9.42. Contract management plans
9.42.1. A contract manager should be appointed and a contract management plan implemented, as
        needed.
9.42.2. All contracts should be developed and actively managed throughout the life of the
        arrangement to ensure required outcomes are achieved and that the contractual obligations
        of both parties are met. Staff members should take account of changing circumstances and
        requirements, and initiate remedial action where necessary in consultation with the delegate
        and suppliers.
9.42.3. Contracts should be administered using sound risk management practices (see CEI 1.1 –
        Managing Risk).
9.42.4. Refer to the resources available on the Contract Management Tab of the Procure|Assist
        Portal.




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9.43. Paying accounts
9.43.1. The procedure for paying accounts is outlined in CEI 6.2 – Making Payments.

9.44. Amendments and variations
9.44.1. FMA regulation 9 approval for amendments, variations or extensions to existing contracts
        (where allowed) is to be addressed in terms of a new spending proposal for the balance
        remaining of the original contract plus the additional procurement value. The approving
        delegate is generally determined by the total value of the contract – the original and additional
        amount(s), refer to FMA regulation 9 directions in Internal Financial Delegations Instrument
        for details and exemptions to this.
9.44.2. Where a contract has expired with no further extension options, any variation to extend timing
        is considered a new procurement and must be conducted in accordance with the CPRs (refer
        Evaluating Options in Procurement Contracts and Panel Arrangements).

10.     Petty cash and Credit card purchases
10.1.1. In general terms, the requirements of this CEI and Operational Guideline apply to purchases
        by credit card. Refer to CEI 7.4 – Cash Advances (including Petty Cash and Cash Floats)
        and CEI 5 –Credit Cards and Credit Vouchers. Exceptions relate to the practical elements of
        the procurement including generating a PRN, etc.

11.     Documentation and storage requirements
11.1.1. Documentation, including submissions must be retained in accordance with the Archives Act
        1983 and should be stored in accordance with the department’s security requirements.
11.1.2. Staff are to retain an appropriate level of documentation when spending public money and
        entering into an arrangement.

         Channel             Details required
         Very Simple         Key decisions should be kept on an official file, such as:
         and Basic            (m) consideration/addressing of any risks;
         procurements         (n) approval of the procurement method;
                              (o) reasons for selecting the supplier(s);
                              (p) quotes; and
                              (q) FMA approvals, with supporting reasons.

                             Documentation requirements for petty cash and credit cards are set out
                             in the relevant CEI.
         Standard            Full documentation should be kept on an official file, such as:
         procurements          (a) the reason for the procurement;
                               (b) the process followed;
                               (c) key decisions (including the procurement method, value for money
                                   assessment and delegate approvals);
                               (d) scope of the services;
                               (e) contract term (end date), including extension options;
                               (f) confidentiality considerations;
                               (g) market approach value/contract value;
                               (h) funding arrangements;
                               (i) progressive expenditure;
                               (j) consideration/addressing of risks;
                               (k) contingent liability considerations; and,
                               (l) notices relating to the contract as required.

11.1.3. Records should be retained in respect of the ongoing contract, with any amendments to the
        contract being clearly documented and retained on file.
11.1.4. In respect of the retention of submissions, staff members should comply with the
        requirements outlined in the internal guidance Records Management Guidance for Finance.



                                                   87
12.     Controls
12.1.1. The key controls in relation to the undertaking of procurement include:
        (a)  financial delegation levels, accreditation and certificate of compliance reporting;
        (b)  tender probity checks and risk assessments;
        (c)  vetting of tenders released on AusTender by the Procurement Assistance and Financial
             Policy Team (Procure|Assist);
        (d)  quality assurance check of contracts entered into the FMIS (SAP) by Procure|Assist or
             the Specialist Financial Advice Teams in Comcar, Comcover, Ministerial and
             Parliamentary Services and Property;
        (e)  documentation requirements (including decisions);
        (f)  public reporting obligations; and
        (g)  compliance audits.

13.     Reference Topics
13.1.   References

        Legislation             Financial Management and Accountability Act 1997
                                Financial Management and Accountability Regulations 1997
                                Members of Parliament (Staff) Act 1994

                                Commonwealth Procurement Rules
                                Archives Act 1983
        Delegations             Financial Management and Accountability (Finance Minister to
                                 Finance Secretary) Delegation Instrument
                                Internal Financial Delegations Instrument
        Finance                 2012/04 - Use of the Lowest Practical Fare for Official Domestic Air
        Circulars                Travel

                                2011/07 - Certificate of Compliance - FMA Act Agencies

                                2011/02 – Commonwealth Procurement Rules Exemption for
                                 Indigenous Businesses

                                2011/01 – Commitments to Spend Public Money (FMA Regulations
                                 7 to 12)

                                2009/11 - Best Fare of the Day for International Official Air Travel
                                2009/03 - Grants and other common financial arrangements
                                2009/02 – The National Public Private Partnerships (PPP) Policy
                                 Framework and National PPP Guidelines
                                2008/10 – Procurement 30 Day Payment Policy for Small Business
                                2006/03 – Limited Liability in Information and Communications
                                 Technology Contracts
                                2006/02 - Commonwealth Procurement Guidelines - Clarification
                                2005/12 - Definition of Procurement of Construction Services
                                2004/14 - Discounts for prepayment and early payment2006/02 –
                                 Commonwealth Procurement Guidelines – Clarification
                                2003/02 – Guidelines for Issuing and Managing Indemnities,
                                 Guarantees, Warranties and Letters of Comfort
        CEIs/Operational        1 – Managing Risk and Internal Accountability
        Guidelines
                                2 – Committing to Spend Public Money

                                            6 – Managing Public Money




                                                88
                               8 – Arrangements with Persons Outside the Commonwealth

                               11 - Arrangements with Other Agencies
        Forms                  Refer to Templates and Checklists on the Procure|Assist Portal.
        Other                  Australian Government Procurement Policy (including guidance)
                               Australian Government Advertising
                               ANAO – Fairness and Transparency in Purchasing Decisions 2007
                               ANAO Better Practice Guide - Developing and Managing Contracts
                                2011-12
                               Buying for Government
                               Confidentiality
                               Construction code of practice
                               Ethics and probity
                               Evaluating Options in Procurement Contracts and Panel
                                Arrangements
                               Industry participation plans (including ICT)
                               Intellectual Property
                               Packaging covenant
                               Parliamentary Standing Committee on Public Works
                               The Procurement Coordinator
                               Procurement Connected Policies
                               Senate Continuing Order on Contracts)
                               Transparency requirements.
                               Records Management Guidance for Finance

13.2.   Key Contacts

        Branch                  Contact for Assistance on:
        Procurement            This CEI and Operational Guideline.
        Assistance and         Procurement.
        Financial Policy       Application of the FMA legislation in this Department.
        Team, Financial        Certificate of Compliance requirements.
        Services Branch        FMA delegations and maintenance of the Finance Officials
        (Procure|Assist)        Delegation Structure Chart.
        Financial              Application of the FMA legislation when seeking to establish or vary
        Framework Policy        WoAG arrangements.
        Branch
        Group or               Setting up SAP access.
        Specialist             Being assigned financial delegations.
        Financial Advisor      Funding information.
        Accounts Payable       Paying accounts and raising Purchase Orders.
        Unit
        Service Desks -        Using SAP.
        SAP
        Legal Services         Legal advice.
        Branch                 Contingent liabilities.
                               Contract development and management.
        Office of Chief        Risk and fraud.
        Audit Executive        Contingent liabilities.
                               Comcover Insurance Policy.




                                               89
CEI/OG 4 - GRANTS
INTRODUCTION

 About this CEI

 This CEI is issued under section 52 of the FMA Act and FMA regulation 6. It provides instruction to
 staff members on the administration of grants.

 What is a grant?

 FMA Regulation 3A(1) defines a grant as an arrangement for the provision of financial assistance by
 the Commonwealth:

     a) under which public money is to be paid to a recipient other than the Commonwealth;

     b) which is intended to assist the recipient achieve its goals;

     c) which is intended to promote one or more of the Australian Government’s policy objectives;
        and

     d) under which the recipient is required to act in accordance with any terms or conditions
        specified in the arrangement.

 However, various forms of financial assistance are taken not to be grants. FMA Regulation 3A(2)
 provides a list of these, which includes certain compensation payments, tax concessions or offsets,
 certain benefit payments (such as payments of entitlements made through the Social Security
 (Administration) Act 1999) and payments made to a State or a Territory under the Federal Financial
 Relations Act 2009.

 If you are unsure whether a particular financial arrangement is a grant or another type of activity, see
 Finance Circular 2009/03: Grants and other common financial arrangements.

 The grants policy framework

 The CGGs are a legislative instrument issued by the Finance Minister under section 64 of the FMA
 Act and FMA Regulation 7A. Regulation 7A requires staff members to act in accordance with the
 CGGs when performing duties in relation to grants administration.

 Grants administration covers the entire process of granting activity and includes: planning and design;
 selection and decision-making; the making of a grant; the management of a funding agreement;
 reporting; and review and evaluation. It also covers a situation where another agency or third party is
 responsible for the administration of an agency’s granting activity.

 The fundamental objective of grants administration is to establish the means to efficiently, effectively,
 economically and ethically administer Australian Government funding to approved recipients, in
 accordance with government policy outcomes.
                                                                          Whole of Government Model CEI Provision



Instances of Non Compliance

All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-



                                                   90
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).




                                                 91
GRANTS - CHIEF EXECUTIVE INSTRUCTION 4 (V1 – 07/2012)

1.       General

          INSTRUCTIONS – all staff



                 You must determine whether a proposed financial arrangement is a grant, prior to
                  applying the CGGs.

          INSTRUCTIONS – Staff involved with grants administration

          General requirements



                 When performing duties in relation to grants administration you must:
                    - act in accordance with the CGGs; and
                    - be satisfied that the outcome will be a proper use of Commonwealth
                        resources.
                 If you are involved in grants administration you must ensure that you:
                    - behave in accordance with the law, government policy, agency rules and
                        applicable funding agreements;
                    - keep commercially sensitive information secure and never use if for personal
                        gain or to prejudice grants administration processes;
                    - disclose information that the Government requires to be notified; and
                    - disclose to your agency any form of current or prospective personal interest that
                        might create a conflict of interest.
                                                                        Whole of Government Model CEI Provision


1.1.1.   Grant payments must be paid to the approved organisation or individual. At no time is a grant
         to be paid to any office holder of an organisation.

2.       Administering grants
2.1.     Grant guidelines
2.1.1.   In developing or revising grant guidelines, you are to ensure consultation occurs with the
         Budget Team (Financial Services Branch), the Department’s Agency Advice Unit (AAU) in
         Budget Group and the relevant policy area in the Department of the Prime Minister and
         Cabinet.


          INSTRUCTIONS – Staff involved with grants administration
          Developing grant guidelines



                 You must ensure that grant guidelines are developed for each new grant program
                  and that they are made publicly available (including on the agency website) where
                  eligible persons and/or entities are able to apply for a grant under the program.
                 You must ensure that grant guidelines and related operational guidance are in
                  accordance with the CGGs.
                 You must determine who can approve the release of new or revised grant guidelines.
                  This is determined on a case-by-case basis using a risk assessment.
                                                                        Whole of Government Model CEI Provision




                                                  92
2.2.     Preparation of grant funding agreements
2.2.1.   You are to ensure that grant funding agreements do not contain provisions that would prevent
         the grant information being made publicly available.
2.2.2.   Grant funding agreements are to be reviewed internally prior to approval for the spending
         proposal being sought.

2.3.     Entering into grant funding agreements
2.3.1.   As grants are spending proposals, you are not to enter into a grant arrangement unless the
         spending proposal has been approved under FMA regulation 9 and (if required) FMA
         regulation 10 (see CEI 2.1 – Approving Spending Proposals and Entering into Arrangements).
2.3.2.   Grant payments are not to be made unless and until a grant funding agreement is in effect (ie:
         has been signed by the parties). Agreements can include any document or instrument
         detailing the terms and conditions of the grant.
2.3.3.   Payments of grants should not be made any earlier than necessary (noting pre-payment may
         occur in limited circumstances) or in a way or time that is inconsistent with that prescribed in
         the grant approval or funding agreement.


          INSTRUCTIONS – Staff involved with grants administration
          Entering into grant funding agreements



                 Before entering into a grant funding agreement, you must ensure that the
                  requirements of FMA regulations 7-12 have been met (see CEI - Committing to
                  Spend Public Money).
                       - In particular, when a spending proposal relating to a grant is approved, the
                           basis (i.e. the substantive reasons) of the approval must be recorded in
                           writing, in addition to the factual terms of the approval.
                 Before entering into a grant funding agreement, you must ensure that the agreement
                  is consistent with the terms of the approval given under FMA regulation 9, including
                  any conditions on the approval.
                                                                         Whole of Government Model CEI Provision


2.4.     Assistance to Minister
2.4.1.   Ministers are to seek agency advice on the merits of a grant before providing financial
         approval of that grant.
2.4.2.   Where Ministers are to consider the approval of a grant, they should be advised that:
         (a) if a Minister in the portfolio (other than the Finance Minister) approves a grant that the
             Department has recommended be rejected, that Minister must report annually to the
             Finance Minister.
         (b) where a grant is approved by the Finance Minister (including where the Finance Minister
             is a member of the House of Representatives and approves a grant in their electorate),
             then the Finance Minister must report annually to the Prime Minister.
2.4.3.   Where the Minister approves a grant that the Department initially recommended should be
         rejected, the ‘MADR‘ (Minister approved, Department rejected) spreadsheet should
         immediately be completed and forwarded to Portfolio Coordination and Communication
         Branch (PCCB).


          INSTRUCTIONS – Staff involved with grants administration
          Supporting the Minister
              You must ensure that your Minister is advised of their responsibilities under the
                CGGs.
                  - Where a Minister exercises the role of a financial approver in relation to a



                                                   93
                       grant, you must ensure that the Minister receives agency advice on the merits
                       of the proposed grant, prior to giving approval.
                   - Each time a Minister who is a member of the House of Representatives
                       approves a grant in respect to their own electorate, you must ensure that the
                       Minister writes to the Finance Minister advising of the details.
                 You must ensure that the Minister reports annually (by 31 March) to the Finance
                  Minister on whether they have approved any grants which the agency recommended
                  be rejected and, if so, outline the basis of the approval for each grant.
                                                                        Whole of Government Model CEI Provision


2.5. Grants reporting


          INSTRUCTIONS – Staff involved with grants administration
          Grants reporting
              You must ensure that information on individual grants is published on the agency
                 website within seven working days of the funding agreement taking effect.
                  - If public reporting of a grant would be contrary to the Privacy Act 1988, other
                      statutory requirements, or the specific terms of the grant funding agreement, you
                      must endeavour to publish as much information as legally possible and must
                      document the reasons for not reporting fully.
                  - If publishing grant information could adversely affect the achievement of
                      government policy outcomes, an exemption from public reporting should be
                      sought from the Finance Minister.
              Grant information should be retained on the agency website for at least two financial
                 years. If this is not practicable, you must:
                  - retain appropriate records of the information and ensure that these records are
                      available on request; and
                  - document the reasons for not retaining the information on the agency website.
              You must ensure that the agency complies with any other grant reporting
                 requirements established by the Parliament.
                                                                        Whole of Government Model CEI Provision


3.       Delegations and directions
3.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

          Arrangements                                       Source (including list of delegates)
          The approver for new or revised grant programs     Possible sources: Expenditure Review
          and guidelines should be determined by the         Committee, Budget, etc.
          origin and the nature of the proposed grants
          program.
          FMA regulation 9 delegate. In determining          Internal Financial Delegations Instrument
          which delegate should approve the payment of a
          grant, the value and nature of the proposed
          grant should be considered.
          FMA section 44 delegate. In determining which      Internal Financial Delegations Instrument
          delegate should enter into the grant
          arrangement, the value and nature of the
          proposed arrangement should be considered.
          Promoting efficient, effective, economical and
          ethical use etc of Commonwealth resources
          (authority to enter into or vary arrangements).




                                                  94
GRANTS - OPERATIONAL GUIDELINE 4

1.       About grants – Key principles
1.1.1.   In developing and administering grants, staff members are to consider the following principles:
         (a) robust planning and design;
         (b) an outcomes orientation;
         (c) proportionality;
         (d) collaboration and partnership;
         (e) governance and accountability;
         (f) probity and transparency; and
         (g) achieving value with public money.

2.       Key steps
2.1.     Planning
2.1.1.   In addition to having regard to the seven key principles and the Commonwealth Grant
         Guidelines (CGGs), staff members planning grant programs, including one-off grants, should
         have proper regard to all relevant issues, such as the need to:
         (a) establish the need for the granting activity;
         (b) define the operational objectives for the granting activity;
         (c) design the granting activity to achieve value for public money;
         (d) ensure that eligibility criteria reflect the policy intent;
         (e) design the granting activity for accountability, probity and transparency;
         (f) communicate effectively with potential recipients;
         (g) establish performance and evaluation measures and methods;
         (h) select an appropriate funding strategy;
         (i) consider taxation matters;
         (j) consider the Australian Government’s accounting treatment;
         (k) develop appropriate documentation, such as grant guidelines and evaluation criteria,
              application forms, funding agreements, etc;
         (l) if required, establish an evaluation panel;
         (m) consider legal and policy matters;
         (n) privacy considerations in the handling of personal or sensitive information; and
         (o) undertake risk management.
2.1.2.   Grant funding agreements are to be drafted so they are consistent with the terms and
         conditions of the approval sought under FMA regulation 9. Features could include:
         (a) a statement of the purpose of the grant (ie: outcomes and the level of mutual benefits
             required);
         (b) an outline of set policies for joint funding arrangements with other funding bodies;
         (c) well-defined terms and conditions (ie: accountability framework, reporting and guidelines);
         (d) ensuring that the processes and objectives associated with the activity are commensurate
             with the nature, complexity and risks involved;
         (e) a statement that the grant details will be published on the Department’s website;
         (f) a timetable and approved method for the payment of the grant; and
         (g) a timetable for the acquittal of the grant.
2.1.3.   In developing or revising grant program guidelines, staff members are to ensure a risk
         assessment is conducted in consultation with the Budget Team (Financial Services Branch),
         the Department’s Agency Advice Unit (AAU) within Budget Group, and the Department of the
         Prime Minister and Cabinet. Risk assessments should consider issues such as
         implementation risks, risks identified in the CGGs, cost, past history (if any) and any
         appropriate mitigation strategies. Staff members can utilise the ‘Self Assessment Risk
         Analysis’ at Attachment A.



                                                   95
2.2.     Approval of the grant guidelines
2.2.1.   Grant program guidelines are to be sent to the Minister for Finance and Deregulation (Finance
         Minister) for consideration.
2.2.2.   Requests for approval should outline the issues considered in the planning stage (above).
2.2.3.   The level of risk applicable to the grant program guideline will determine what level of
         approval is required. For programs assessed as:
         (a) low or medium risk – the agreement of the Finance Minister is required.
         (b) high risk – the guideline is to be referred to the Expenditure Review Committee (ERC) for
             consideration.

2.3.     Seek applications (communication as appropriate)
2.3.1.   Upon approval of the grant program, staff members should promote the program (as
         appropriate), issue the application forms and eligibility criteria, and state the process for
         lodgement and the closing date.
2.3.2.   In communicating the grant program, potential applicants are to be informed that:
          (a) the details of any grant(s) awarded will be published in the Department’s website.
          (b) they are to provide a declaration that they are not currently receiving funding for the
              purpose (to which the grant is requested) from other Australian Government sources;
              and
          (c) if awarded a grant, that they will be required to render full acquittals of the funds
              provided, at a minimum, at the completion of the project.

2.4.     Assess application(s)
2.4.1.   Upon receipt of grant applications, staff members are to assess the application(s) against the
         eligibility criteria to determine if it proceeds to evaluation.
2.4.2.   Offers of grants must be assessed by the evaluation panel objective and, where relevant,
         against the evaluation criteria. There should be a clear separation of duties between the
         assessment of applications and the approval of offers.
2.4.3.   The decision agreed upon by the evaluation panel must be recorded for successful and non-
         successful applicants.

2.5.     Obtain approval
2.5.1.   Appropriate documentation should be provided to the Finance Minister, Secretary or FMA
         delegate in relation to FMA regulation 9 and 10 considerations so as to allow them to exercise
         the function of an approver. Approvers must be satisfied, in accordance with FMA regulation
         9, that the grant proposal is an efficient, effective, economical and ethical use of public money
         that is not inconsistent with the policies of the Commonwealth.
2.5.2.   So as to ensure compliance with FMA regulation 12, it must be ensured that:
         (a) the terms and scope of the grant (spending proposal) are fully documented in writing by
              the approver; and
         (b) the approver records the basis on which they are satisfied that the grant proposal
              complies with FMA regulation 9.
2.5.3.   If a staff member becomes aware of a Minister approving a grant that the Department
         previously recommended should be rejected, the ‘MADR‘ (Minister approved, Department
         rejected) spreadsheet should be immediately completed and forwarded to Portfolio
         Coordination and Communication Branch (PCCB).
2.5.4.   If the Finance Minister is required to approve a grant, to ensure compliance with the CGGs,
         the Minister should also be informed beforehand of their responsibility under the Guidelines
         (see CEI 4 – Grants).




                                                    96
2.6.     Issue agreement and unsuccessful applications
2.6.1.         The grant agreement should be sent to the recipient for appropriate signature. The
         agreement must be returned to the Department so as to ensure appropriate execution by the
         Finance Minister or a delegate under section 44 of the FMA Act.
2.6.2.   Unsuccessful applicants should be promptly advised that their application was not successful.

2.7.     Grants reporting
2.7.1.          PCCB is to be advised immediately through the Grants Awarded reporting spreadsheet,
         when the funding agreement has been signed by both parties. PCCB is to then publish the
         grant details on the Department’s website within the mandatory seven (7) days.
2.7.2.   In the case of House of Representative members only, if a grant is approved by a Minister in
         their own electorate, staff members should immediately forward to Financial Management
         Group (FMG) (for quarterly whole-of-government reporting):
         (a) copies of the brief and the letter; and
         (b) details relating to the basis on which the approval was made.
2.7.3.          The Department is to comply with other grants-related reporting requirements
         established by the Parliament. These include the requirements for agency annual reports,
         Senate Order 14 (the Minchin Order) and Senate Order 192 (the Murray Motion).

2.8.     Payment of grants
2.8.1.   Approved grants must only be paid to the organisation or individual that is awarded the grant.
2.8.2.   Grant payments should generally be made only after agreed milestones have been met.
2.8.3.   Where a prepayment arrangement is considered preferable, it must incorporate provisions for
         interest earned by the grant recipient to be acquitted as part of the total grant (see: Finance
         Circular 2004/14 – Discounts for prepayment and early payment).

2.9.     Monitoring, review and acquittal of grants
2.9.1.   Staff members must commence monitoring of the grant awarded as soon as the grant
         becomes operational so as to allow the Department to assess whether the grant’s objectives
         are being met. This includes ensuring the compliance of the grant with all relevant legislative
         and policy requirements.
2.9.2.   Monitoring of grants awarded should be done consistently and in accordance with pre-
         established procedures. Particular attention should be directed to those grant projects with a
         perceived or apparent higher risk.
2.9.3.   Progress reports submitted by grant recipients should be reviewed by staff members (both in
         relation to outputs achieved and financial targets).
2.9.4.   Acquittal procedures must be undertaken as predetermined. The acquittal evidence should
         include:
         (a) a Certificate or Statement of Compliance from the responsible officer of the grant recipient
              organisation;
         (b) financial statements covering the period of the grant; and
         (c) an independent audit report or commensurate evidence based on the nature of the grant,
              ensuring accountability.

2.10. Overall evaluation of grant program
2.10.1. Upon the conclusion of the timeframe for the grant program, staff members should conduct an
        evaluation to determine the extent it met the objectives and any lessons learnt for future
        programs.
2.10.2. Performance information obtained should be adequate enough so as to ensure the
        Department can assess the efficiency and effectiveness of the program.




                                                   97
2.11. Records to be kept
2.11.1. Staff members should ensure that sufficient records are kept to identify:
        (a) considerations in the development of the grant program (including risk assessments);
        (b) approval/refusal decisions and supporting documentation;
        (c) agreements with recipients;
        (d) program guidelines;
        (e) receivable invoices;
        (f) payment vouchers;
        (g) acquittals of grants; and
        (h) evaluation of programs.

3.       Controls
3.1.1.   The key controls in relation to the administration of grants are:
          (a) Certificate of Compliance Group sign-off questionnaire.
          (b) the provision of a ‘certificate of compliance’ from the grant recipient to ensure that
              financial accountability in relation to the grant is achieved.
          (c) recipients and payment amounts in relation to Grants-in-Aid Program are determined by
              the Expenditure Review Committee (ERC).

4.       Reference topics
4.1.     Reporting – Ministerial approval
4.1.1.   By 31 March of each year, PCCB is to prepare reports to the Prime Minister and/or Finance
         Minister detailing each instance (for the preceding calendar year), where a Minister in the
         Finance portfolio approved a grant that the Department had recommended be rejected. In
         instances where grants have been approved by the Finance Minister, the report is to be
         provided to the Prime Minister. For grants approved by a different Portfolio Minister, the
         report is to be provided to the Finance Minister.
4.1.2.   For whole-of-government purposes, FMG is to report quarterly where a House of
         Representative member approves a grant in their own electorate.

4.2.     Reporting - website
4.2.1.   The details published on the Department’s website site shall be retained on the site for at
         least two (2) financial years.
4.2.2.   In the event that information relating to a grant is not retained on the Department’s website for
         at least two (2) financial years, PCCB is to ensure that, in accordance with the mandatory
         CGG requirement, that the reason is documented.
4.2.3.   PCCB are to prepare the reports in accordance with Finance Circular 2009/04 – Grants –
         Reporting Requirements.
4.2.4.   Grants awarded by the Department must also be reported in the Department’s Annual Report.

4.3.     Key references

          Legislation              Financial Management and Accountability Act 1997
                                   Financial Management and Accountability Regulations 1997
                                   Criminal Code Act 1995
                                   Public Service Act 1999
                                   Privacy Act 1988
                                   Privacy Amendment (Private Sector) Act 2000
          Finance Circular         2011/01 – Commitments to Spend Public Money (FMA
                                    Regulations 7 to 12)
                                   2009/04 – Grants: Reporting Requirements
                                   2009/03 – Grants and other Common Financial Arrangements
                                   2004/14 – Discounts for prepayment and early payment



                                                    98
       CEIs/Operational        2.1 – Approving Spending Proposals
       Guidelines
       Forms                   ‘MADR‘ (Minister approved, Department rejected) spreadsheet
                               Grants Awarded reporting spreadsheet
       Other                   Development and Approval of Grant Program Guidelines May
                                2012
                               ANAO - Better Practice Guide - Grants Administration June 2010

4.4.   Key contacts

       Branch               Contact for Advice on
       Budget Team,          Confirmation on the arrangements for consultation by the
       Financial Services      Expenditure Review Committee.
       Branch (in liaison
       with Budget
       Group)
       Procurement             General terms and conditions of the CEI and Operational
       Assistance and           Guideline.
       Financial Policy        Internal Delegation issues
       Team, Financial
       Services Branch
       Legal Services          Form and content when drafting funding agreements.
       Branch
       Portfolio               Publishing requirements for grants.
       Coordination and
       Communications
       Branch
       Financial               Report quarterly on instances where a House of Representative
       Framework                member approves a grant in their own electorate.
       Branch, FMG
       Special Claims          Policy and administration information for the Grants-in-Aid
       and Land Policy          Program.
       Branch, AMPS




                                                99
ATTACHMENT A: OPERATIONAL GUIDELINE 4 -GRANTS RISK ANALYSIS


            PROGRAM GUIDELINES SELF ASSESSMENT RISK ANALYSIS *


Program details

[Insert the following information:]

Name of agency:

Name of program:

Summary of program, including program objectives and the relevant agency outcome it contributes to:

Total cost of program and cost over the Budget and forward estimates:

Policy authority for program:

Other relevant information:


Discussion of key issues and implementation risks

[Provide details on the areas assessed for risk and on any identified risks or sensitivities arising from this
assessment, having regard to the notes in Attachment B1 of Estimates Memorandum 2011/19.

Agencies should employ additional headings or supporting data, including attachments, as necessary.]

Risk assessment

[On balance, do you assess the program as being of low, medium or high risk? Summarise the reasons for your
assessment below.]

Risk management

[Any mitigation strategies for addressing particular risks should be mentioned here]

*
 Agency to complete and discuss with Finance and PM&C policy counterparts before submitting to the
responsible portfolio minister for consideration.

Source: Estimates Memorandum 2011/19.




*
  Agency to complete and discuss with Finance and PM&C policy counterparts before submitting to the
responsible portfolio minister for consideration.


                                                        100
CEI/OG 5 - COMMONWEALTH CREDIT CARDS AND CREDIT
VOUCHERS
INTRODUCTION


 About this CEI
 This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction to
 staff members on the use of Commonwealth credit cards and credit vouchers.

 What are Commonwealth credit cards and credit vouchers?
 A Commonwealth credit card is a credit card issued to the Commonwealth to enable it to obtain
 cash, goods or services on credit (i.e. with payment deferred). A credit voucher is a paper based
 credit card that generally comes with an attached spending limit (e.g. a Cabcharge voucher).

 Charge cards and vendor cards issued to the Commonwealth are both a form of “Commonwealth
 credit card” for the purposes of the FMA Act and Regulations.

        Charge cards authorise the holder to buy goods or services on credit, with payment in full
         required to be made at a later date (e.g. MasterCard, Visa and AMEX).
        Vendor cards (sometimes called “limited-purpose purchase cards”) are charge cards
         provided by specific retailers (e.g. Cabcharge cards, travel cards and fuel cards).

 Credit cards and credit vouchers issued to the Commonwealth are different from personal credit
 cards or vouchers, as they do not provide the holder with a revolving line of credit. Money borrowed
 by the Commonwealth through the use of a credit card or credit voucher must be paid in full within a
 specific timeframe.

 Debit cards, pre-paid credit cards and gift vouchers issued to the Commonwealth are not
 Commonwealth credit cards. They should be treated as if they were public money.

 How do Commonwealth credit cards and credit vouchers work?
 The use of a Commonwealth credit card or credit voucher is a borrowing by the Commonwealth (i.e.
 an advance of money that must be repaid in accordance with contractually agreed terms).

 The Finance Minister can enter into a limited range of borrowing agreements under section 38 of the
 FMA Act. This includes entering into an agreement for the issue to, and use by, the Commonwealth
 of credit cards or credit vouchers, provided that the agreement requires the money borrowed to be
 repaid within 60 days after the Commonwealth is notified of the amount borrowed. The Finance
 Minister has delegated this power to all Chief Executives.

 Generally, a Chief Executive or their delegate will enter into a single overarching borrowing
 agreement for each form of Commonwealth credit card or credit voucher. Staff members then act on
 the relevant borrowing agreement by using a card or voucher issued under that agreement - each
 Commonwealth credit card and credit voucher is not a separate borrowing agreement.
                                                                       Whole of Government Model CEI Provision


Instances of Non Compliance

All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).



                                                 101
COMMONWEALTH CREDIT CARDS AND CREDIT VOUCHERS - CHIEF
EXECUTIVE INSTRUCTION 5 (V2 – 07/2012)
1.       General
1.1.1.   All Commonwealth credit card (as defined in Glossary) for holders and staff members who
         issue Commonwealth credit cards/vouchers (including E-tickets) are to have FMA section 44
         and FMA regulation 9 delegations (directions that apply are specified in the Internal Financial
         Delegation Instrument). The approved staff member may authorise (preferably in writing) the
         use of the Commonwealth credit card or credit voucher by another staff member.
1.1.2.   You will only be issued with a Commonwealth credit card or credit voucher if you have an
         identified business case need.
1.1.3.   You are not to accrue frequent flyer and loyalty points offered by credit providers.


          INSTRUCTIONS – All staff

                 Only an official may use a Commonwealth credit card or credit voucher.
                 Only the person issued with a Commonwealth credit card or credit voucher, or
                  someone specifically authorised by that person, may use that credit card, credit card
                  number or credit voucher.
                 You may only use a Commonwealth credit card or card number to obtain cash, goods
                  or services for the Commonwealth.
                      - However, you may use a Commonwealth credit card or card number to pay
                           for private expenditure which is coincidental to your work duties, if your Chief
                           Executive has authorised this.
                      - You cannot use a Commonwealth credit card or card number for solely
                           private expenditure.
                 In deciding whether to use a Commonwealth credit card or credit voucher, you should
                  consider whether it would be the most cost-effective payment option in the
                  circumstances.
                 Before using a Commonwealth credit card or credit voucher, you must ensure that
                  the requirements of FMA Regulations 7-12 (see CEI - Committing to Spend Public
                  Money) have been met, including ensuring that a spending proposal has been
                  approved before entering into the arrangement.
                 You must ensure that your use of a Commonwealth credit card or credit voucher is
                  consistent with the terms of the approval given under FMA Regulation 9, including
                  any conditions of the approval.
                 You must ensure that any Commonwealth credit cards and credit vouchers issued to
                  you are stored safely and securely.
                                                                          Whole of Government Model CEI Provision


2.       Use of Commonwealth credit cards and credit vouchers
2.1.     Conditions regarding Commonwealth credit cards and credit vouchers
2.1.1.   In using a Commonwealth credit card or credit voucher, you must:
          (a) not use the Commonwealth credit card or credit voucher for your sole, private purpose or
              to access cash;
          (b) not charge coincidental personal work related expenses (ie: travel) to your
              Commonwealth credit card or credit voucher without prior endorsement from your
              manager;
          (c) comply with the financial framework, the Internal Financial Delegation Instrument, any
              conditions applying to the use of the card and their transactional/credit limits;




                                                   102
         (d) ensure that the provisions of the Commonwealth Procurement Rules are followed to
             assist in achieving value for money (see also CEI 2 – Committing to Spend Public
             Money);
         (e) only use the facility for official purposes, unless specifically permitted under the FMA
             legislation, Internal Financial Delegation Instrument or CEI; and
         (f) ensure the card is kept safely and returned when requested or no longer required.

2.2.     Cash and coincidental private expenditure
2.2.1.   You cannot draw cash using a Commonwealth credit card (this functionality is blocked unless
         you have been specifically approved by the Secretary or the Chief Financial Officer). You
         should only use the pin number to facilitate the use electronic payment facilities.
2.2.2.   Commonwealth credit cards may be used to pay for modest private expenditure which is
         coincidental to official expenditure but such expenditure is to be repaid by the staff member to
         the Department as soon as practicable (and in accordance with any standard terms of trade).

3.       Establishing a credit facility
3.1.1.   The requirements of the Agency Banking Framework Guidance Manual must be met when
         establishing a credit card or credit voucher facility (including establishing a bank account).


          INSTRUCTIONS – Staff with a delegation to enter into borrowing agreements for
          Commonwealth credit cards and credit vouchers

                 When entering into a borrowing agreement for the issue to, and use by, the
                  Commonwealth of credit cards or credit vouchers, you must:
                   - have a valid delegation under subsection 38(2) of the FMA Act;
                   - comply with the directions in the delegation from the Finance Minister or any
                     directions in the delegation from your Chief Executive;
                   - ensure that the borrowing agreement requires the money borrowed to be repaid
                     within 60 days of the Commonwealth being notified of the amount borrowed;
                   - ensure that the requirements of FMA Regulations 7-12 (see CEI - Committing to
                     Spend Public Money) have been met; and
                   - ensure that the procurement of the credit card and/or credit voucher services is in
                     accordance with the CPRs (see CEI - Procurement).
                                                                          Whole of Government Model CEI Provision


4.       Delegations and directions
4.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

          Arrangements                                      Source (including list of delegates)
          Under FMA section 38(2), enter into               Financial Management and Accountability
          agreements for borrowing money where the          (Finance Minister to Finance Secretary)
          agreement requires the money to be repaid         Delegation Instrument
          within 60 days after the Commonwealth is
          notified by the lender of the amount              Internal Financial Delegation Instrument
          borrowed.
          FMA section 44 and FMA regulation 9               Internal Financial Delegation Instrument
          delegations

          Under FMA regulation 21(2), use the card for
          coincidental (modest) private expenditure.




                                                   103
4.1.2.   In addition to the delegated responsibilities, the following is also applicable:

          Position            Responsibility
          Deputy                Prior to supporting a credit card facility application in the
          Secretary               Department, ensure that the staff member has FMA section 44
                                  and FMA regulation 9 delegation.
                                Responsible for the management and review of credit cards within
                                  their Business Group. This includes reviewing transaction
                                  amounts on credit cards assigned to their Business Group when
                                  requested by the Treasury, Taxation and Asset Management
                                  Team.
          Chief Financial       Ensure that appropriate controls are in place for the continual
          Officer                 management of credit cards/vouchers in accordance with
                                  departmental and Commonwealth policies.
          Treasury, Tax         Manage the relationship with providers.
          and Asset             Implement controls in accordance with departmental and
          Management              Commonwealth policies
          Team, Financial       Actively monitor the issuing, cancellation, limit
          Operations              increases/decreases, acquittal and expenditure.
          Branch                Ensure that holders are provided with guidance on the use of
          (credit cards)          credit cards/vouchers.
                                Ensure card holders are FMA section 44 and FMA regulation 9
                                  delegates.
          Accounts              Ensure that the credit facility account is paid by the appropriate
          Processing Unit         due date.
          (Cabcharge/E-         Maintain a complete and current record of credit cards and credit
          Tickets)                vouchers issued within the Department and a reconciliation of
                                  transaction documentation.
          Commonwealth          Ensure they have delegation under FMA Act section 44 and FMA
          credit card or          regulation 9 (refer delegate listing schedule in the Internal
          credit voucher          Delegation Instrument).
          holders               Comply with the financial framework, the Internal Financial
                                  Delegation Instrument, any conditions applying to the use of the
                                  card and transactional/credit limits.
                                Only use the facilities for official purposes, unless specifically
                                  permitted under the FMA legislation, Internal Financial Delegation
                                  Instrument or CEI.
                                Be an iCMS user (for acquittal and authorisation purposes).
                                Where minor coincidental private expenditure is incurred with
                                  official expenditure, repay the private expenditure within the
                                  Department’s standard terms of trade.
                                Ensure the card is kept safely and returned when requested or no
                                  longer required.




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COMMONWEALTH CREDIT CARDS AND CREDIT VOUCHERS - OPERATIONAL
GUIDELINE 5
1.       General
1.1.1.   Credit cards are a payment mechanism to be used as an alternative to direct credits and petty
         cash for transactions that are of low (ie: minimal) value.

2.       Process for establishing credit facilities
2.1.     Establishing a credit facility
2.1.1.   The Chief Financial Officer (CFO) has been delegated the authority to enter into
         arrangements for credit arrangements (ie: Commonwealth credit cards or credit vouchers).
2.1.2.   Requests to the delegate to establish a new credit facility must include a supporting business
         case before the procurement process to secure such services can be undertaken.
2.1.3.   Delegates can enter into a single overarching borrowing agreement for each form of
         Commonwealth credit card required. Each form of Commonwealth credit card issued under
         such an arrangement is not a separate borrowing.

2.2.     Authorised signatories for the facility
2.2.1.   Under the Financial Transaction Reports Act 1988, the verification of the identity of the bank
         account signatories is required. The CFO is to nominate/approve the Authorised Signatories
         to administer the ongoing operations of the facility. The provider will supply documents for
         Authorised Signatories to complete (which include providing identification information).

2.3.     Applying for a Commonwealth credit card
2.3.1.   To gain cardholder status, staff members are required to complete:
         (a) the bank’s business Credit Card application form;
         (b) the Credit Card Approval acknowledgment and declaration form;
         (c) the Financial Delegate Assignment and FMIS Access Form or a copy if already in place;
             and
         (d) an iCMS user application form (if not already in place).
2.3.2.   The completed business Credit Card application and Credit Card Approval forms are to be
         provided to the Treasury, Taxation and Asset Management Team to:
         (a) seek authorisation (by two authorised bank signatories) and undertake a consistency
             check of applicable transaction/credit limits and verify identification requirements;
         (b) lodge the application with the bank (recording the details of the lodgement).
2.3.3.   Once received, the bank will process the application (including undertaking all necessary
         identification checks). The bank will generate a unique card number (including imprinting the
         details on the card) and allocate it to the cardholder.
2.3.4.   The completed Finance Delegate Assignment and FMIS Access form and iCMS user form are
         to be provided to the relevant Group Financial Advisor.

2.4.     On receiving a Commonwealth credit card
2.4.1.   Once the cardholder receives the card (and PIN), they are to notify the Treasury, Taxation
         and Asset Management Team of the details (excluding the PIN) to confirm the date of receipt.
         At no time is the PIN to be disclosed to another party.
2.4.2.   To activate the card, the cardholder is required to contact the issuing bank, using the details
         indicated in the correspondence enclosed with the card. Until then, the card cannot be used.
2.4.3.   Cardholders can contact the Corporate Cards department of the issuing bank to arrange to
         have a PIN reissued.




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2.4.4.   Cash withdrawals are blocked and the card cannot be used in Automatic Teller Machines
         (ATM).
2.4.5.   The Treasury, Taxation and Asset Management Team is to ensure that the relevant details
         (ie: cost centre) are loaded into the iCMS (expense management system) and the cardholder
         provided with information about their iCMS access.
2.4.6.   If the cardholder moves to another area/cost centre, the iCMS Helpdesk should be advised by
         email as soon as possible and a credit card transfer form completed. Cardholders are to
         ensure they have financial delegations (and the appropriate threshold) for their new position.

2.5.     Applying for a Commonwealth credit voucher (including Cabcharge card or voucher)
2.5.1.   Where credit voucher facilities are to be set up in a work area (such as Cabcharge E-Tickets)
         or for an individual officer (generally a Cabcharge card), the Accounts Processing Unit is to be
         sent the following for processing:
         (a) a Credit Voucher Application Form;
         (b) the Financial Delegate Assignment and FMIS Access Form for the person that will be
              responsible for administering the arrangement or being issued with a Cabcharge card -
              or a copy if already in place; and
         (c) an iCMS User Application Form (if not already in place).
2.5.2.   When issuing the Cabcharge E-Ticket or Cabcharge card, the Accounts Processing Unit is to
         provide the staff member with details of how the arrangement is to be administered. The staff
         member will complete and sign an ‘Issue/Transfer of Cabcharge Card/E-Ticket Form‘.
2.5.3.   The Accounts Processing Unit is to be advised when the Cabcharge E-Ticket pack has been
         completed and given sufficient (ie: timely) notice if a new pack of Cabcharge E-Tickets is
         required.

3.       Process for using Commonwealth credit cards and credit vouchers
3.1.     Using a Commonwealth credit card or credit voucher
3.1.1.   When making a purchase using a Commonwealth credit card or credit voucher (either through
         signing for goods/services received or entering the PIN), staff members are to ensure that:
         (a) they have obtained value for money;
         (b) they have followed all purchasing/procurement obligations;
         (c) they have spent only within their specified delegation/card transaction limit, including
               seeking FMA regulation 9 approval and, if required, FMA regulation 10 agreement; and
         (d) they have ensure that a purchase order has been raised in SAP (and a contract if any
               purchase is for $10,000 inc GST or more).
3.1.2.   Staff members are to ensure that credit vouchers are completely and correctly filled out with
         no blank spaces, particularly in respect of the value, so that the details cannot be altered.
3.1.3.   Staff members should retain all documentation associated with each purchase (ie: voucher
         (E-Ticket) stubs, invoices and receipts for acquittal purposes). Failure to do so may breach
         FMA Act and GST requirements.
3.1.4.   Where purchases are made over the telephone, the tax invoice should be annotated
         ‘telephone transaction' and maintained with other credit card documentation. Only the credit
         card holder can undertake telephone transactions on the particular Commonwealth credit
         card.
3.1.5.   Staff members are to promptly return unused credit vouchers (E-Tickets) to the Issuing staff
         member. The Issuing staff member is to amend allocation of unused E-Tickets within iCMS.
3.1.6.   Where a Commonwealth credit card is required to be used in an overseas locality that only
         accepts six digit PINs, the cardholder will need to add two zeros to the end of their four digit
         pin.
3.1.7.   Where modest (ie: minor) coincidental private expenditure is incurred on a Commonwealth
         credit card with official expenditure, staff members are to repay the private expenditure within




                                                   106
         the Department’s standard terms of trade. Coincidental personal expenditure on other credit
         facilities, ie: fuel cards is not permitted.
3.1.8.   Any suspected misuse, loss or theft of a Commonwealth credit card or credit voucher must be
         immediately reported to the Financial Operations Branch along with the bank that issued the
         credit card or credit voucher.

3.2.     Acquitting Commonwealth credit cards and credit vouchers
3.2.1.   Staff members are to promptly acquit credit card charges in iCMS within 30 days of
         transaction date.
3.2.2.   Transactions made are to be identified in iCMS against the relevant credit card or credit
         voucher holder. Submitting an iCMS entry should be managed in accordance with the
         processing rules (including as outlined on the iCMS Intranet page).
3.2.3.   All acquittals and authorisations occur electronically through iCMS. Such an authorisation is
         not exercising an FMA financial delegation (which is expected to occur before the charge is
         incurred). The authorisation process provides a ‘probity’ check of work-related expenses and
         ensuring the correct coding of costs. Acquittals are to be performed promptly each month.
         When acquitting charges, staff members must submit documentation (ie: credit voucher (E-
         Ticket) stub, receipt and where applicable, a properly rendered tax invoice or statutory
         declaration) associated with the purchase of goods or services to the relevant delegate for
         noting and appropriate action.
3.2.4.   When reviewing their credit card transactions, staff members are to immediately advise the
         Treasury, Taxation and Asset Management Team of any disputed amounts.
3.2.5.   Payment of the Commonwealth credit card accounts are completed by the Treasury, Taxation
         and Asset Management Team.
3.2.6.   For Commonwealth credit cards, once iCMS transactions have been authorised, the iCMS
         Creditor Expense Report and receipts are to be forwarded to the Accounts Processing Unit.
3.2.7.   In respect of credit vouchers (Cabcharge Cards/E-Tickets), once iCMS transactions have
         been authorised, the iCMS Creditor Expense Report and E-Ticket receipts are to be
         forwarded to the Accounts Processing Unit.

3.3.     Receipt of statements and payments
3.3.1.   Upon the statement being received by the Department, a reconciliation of the items listed
         against the items authorised in iCMS is to occur.
3.3.2.   Payment should be made in accordance with the terms and conditions outlined in the
         agreement between the Department and the credit facility provider.
3.3.3.   If a staff member becomes aware of a discrepancy in a statement provided by a provider,
         consultation is to occur with the provider to clarify or rectify the statement/payment.

3.4.     Return or cancellation of a Commonwealth credit card or credit voucher
3.4.1.   Commonwealth credit cards are not transferable.
3.4.2.   Staff members returning their cards or transferring credit vouchers (Cabcharge cards and/or
         E-Tickets) should ensure they have acquitted their transactions in iCMS and/or have left the
         required documentation to facilitate acquittal with their supervisor or Executive Assistant.
3.4.3.   Cards or credit vouchers (E-tickets) that are no longer required are to be securely provided to
         the Treasury, Taxation and Asset Management Team or the Accounts Processing Unit,
         respectively for cancellation.
3.4.4.   In cancelling a credit card (ie: Commonwealth or Cabcharge card), the Treasury, Taxation
         and Asset Management Team is to ensure that the card is cut into two and returned to the
         credit facility provider with a written notice confirming the cancellation of the card.
3.4.5.   Credit vouchers (E-Tickets) should be returned to the Accounts Processing Unit when no
         longer required. The ‘Issue/Transfer of Cabcharge Card/E-Ticket Form‘ is to be completed
         and provided with the credit voucher (E-Tickets). The Accounts Processing Unit will



                                                  107
         determine whether to reissue the credit voucher (E-Tickets) to another area in the Department
         or destroy it.

3.5.     Register of cardholders/holders of vouchers
3.5.1.   The Treasury, Taxation and Asset Management Team (for Commonwealth credit cards) or
         Accounts Processing Unit (for Cabcharge cards/E-Tickets) is to maintain a Register detailing:
         (a) the nature of the facility;
         (b) each card/ E-Ticket pack holder’s name;
         (c) the area and cost centre;
         (d) card/account number;
         (e) credit card transaction limits;
         (f) the date the card/ E-Ticket pack (was received by and returned to the Accounts
               Processing Unit or the Treasury, Taxation and Assets Team;
         (g) date when it was issued to card/E-Ticket holder;
         (h) a copy of the signed bank business credit card application form and the signed the
               ‘Credit Card Approval Form’ (an acknowledgment and declaration form) or
               ‘Issue/Transfer of Cabcharge Card/E-Ticket Form‘; and
         (i) the Financial Delegate Assignment and FMIS Access Form.
3.5.2.   Any cards held by a staff member are to be stored securely at all times.
3.5.3.   All credit books and vouchers (ie: E-Ticket packs) are to be retained in a secure location and
         logged when issued. Vouchers and booklets (ie: individual E-Tickets or E-Ticket packs) are
         only to be issued on an ‘as required’ basis.

4.       Controls
4.1.1.   The key controls in relation to the use of Commonwealth credit cards and credit vouchers are:
         (a) internal audit program;
         (b) management of cards undertaken by Treasury, Taxation and Asset Management
             Team/Accounts Processing Unit (including maintenance of card/E-Ticket holder register);
         (c) authorisation of transactions by supervisors;
         (d) regular review of credit card and credit voucher processes and operations; and
         (e) accountability (reconciliations and returning receipts (including E-Ticket receipts) to
             processing area).

5.       Reference topics
5.1.     General requirement
5.1.1.   To minimise the risk of accidental use, staff members issued a Commonwealth credit card or
         Cabcharge card should hold it separately from their personal bank card(s).
5.1.2.   The Department is not exempt from the GST. All GST liable supplies of goods and services
         to the Department are to include a GST component in the price. Purchases made by a
         Commonwealth credit card from suppliers without a valid Australian Business Number (ABN)
         are to be minimised so the Department is not subject to additional taxation rates.

5.2.     Credit card fees and return of goods
5.2.1.   Where use of a card may incur a small transaction fee, if the cardholder determines that the
         convenience and overall cost of using a credit card still proves to be the best value for money
         option, then the card may be used.
5.2.2.   Where goods purchased with a Commonwealth credit card are returned to the supplier for
         credit, a record of the credit reversal should be retained and the details outlined on iCMS.
         The Treasury, Taxation and Asset Management Team are to be provided with details of the
         return to confirm any taxation requirements.

5.3.     Use of personal bank card for Official purposes



                                                  108
5.3.1.   If a staff member has obtained pre-approval, they may use their personal bank card (either
         credit or debit card) for official purposes in emergency circumstances (such as where a
         Commonwealth credit card is lost or not accepted for use) and seek reimbursement from the
         Department at a later date. Depending on the circumstances, generally any transactional
         charges incurred through official purposes on a personal bank account are the responsibility
         of the staff member.

5.4.     Disputes
5.4.1.   For Commonwealth credit cards, any disputed items should be discussed with the cardholder
         and referred by email to the Treasury, Taxation and Asset Management Team if funds need
         to be reimbursed to the Department by the cardholder or liaison with the card provider is
         required.
5.4.2.   Staff members should always check Cabcharge transactions, particularly the values that
         appear in iCMS, to confirm their consistency with any corresponding documentation (ie:
         receipt or E-Ticket stub). If an amount in iCMS is different, staff members should forward
         copies of disputed items to the Accounts Processing Unit (preferably by email) with the
         details. The iCMS entry should be left as unsubmitted. The Accounts Processing Unit will
         liaise with Cabcharge to confirm if a refund is owing to the Department and inform the relevant
         area of the outcome.

5.5.     Key references

          Legislation                Financial Management and Accountability Act 1997
                                     Financial Management and Accountability Regulations 1997
                                     Financial Transaction Reports Act 1988
                                  
                                      Commonwealth Procurement Rules
          Forms                      Financial Delegate Assignment and SAP Access Form
                                     Credit Card Approval form
                                     CBA Application form
                                     Credit Voucher/Card (Cabcharge) application form
                                     Issue/Transfer of Cabcharge Card/E-Ticket Form
                                     iCMS Access Request form
          CEIs/Operational           2 – Committing to Spend Public Money
          Guidelines                 6.2 – Making Payments
                                     6.4 – Taxation Obligations
          Other                      iCMS User Manual
                                     ANAO Report 37: Management of Credit Cards
                                     iCMS Quick Reference Card 1.07
                                     Agency Banking Framework Guidance Manual

5.6.     Key contacts

          Branch                    Contact for Assistance on:
          Treasury, Taxation       Commonwealth credit card arrangements.
          and Asset                Taxation obligations.
          Management Team,
          Financial Operations
          Branch
          Accounts Processing      Cabcharge arrangements – x3766
          Unit, Financial
          Operations Branch
          Procurement              This CEI and Operational Guideline.
          Assistance and           Procurement advice.
          Financial Policy         Internal Delegations advice.



                                                  109
         Team, Financial
         Services Branch
         Service Desk - iCMS       iCMS Systems Support call x2500 .




CEI/OG 6 - MAKING PAYMENTS OF PUBLIC MONEY
INTRODUCTION



 1.      About this CEI
 This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction to
 staff members on making payments of public money, including drawing rights, the payment of
 accounts, discretionary compensation payments and taxation obligations.

 2.      Making payments of public money
 The expenditure of public money can only occur under the authority of an appropriation. Therefore,
 before making a payment of public money staff members must ensure that the money will be spent
 for the purpose for which it was appropriated. They must also ensure that there is sufficient available
 appropriation to cover the proposed payment.

 These requirements apply to all payments, including both manual and automated payments. They
 also apply regardless of whether a payment is made from a departmental or administered
 appropriation. A payment involves the transfer of cash, the issuing of instructions to process an
 Electronic Funds Transfer, the execution and issuing of a cheque, the use of a debit card or through
 another process.

 The same requirements also extend to notional payments, such as where one FMA Act agency
 pays another for services or where one part of an FMA Act agency pays another part of that agency
 and the payment involves the debiting of an appropriation.

 Drawing rights are the key mechanism by which an agency controls who can access its
 appropriations and make payments on its behalf. Drawing rights are required whenever a staff
 member or Minister makes a payment of public money, requests the debiting of an appropriation or
 debits an appropriation.
                                                                        Whole of Government Model CEI Provision




Instances of Non Compliance

All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).




                                                 110
DRAWING RIGHTS - CHIEF EXECUTIVE INSTRUCTION 6.1 (V1 -07/2012)

1.     General

        Drawing rights allow agencies to set conditions and limits over who may lawfully draw upon
        an appropriation and make a payment of public money.

        Section 27 of the FMA Act allows the Finance Minister to issue, revoke and amend drawing
        rights. This power has been delegated with directions to all agency Chief Executives, who
        in most cases have sub-delegated it to certain agency staff members.

        INSTRUCTIONS – all staff


              You must not:
                   a) make a payment of public money;
                   b) request the debiting of an appropriation; or
                   c) debit an appropriation;
                   unless authorised to do so by a valid drawing right.
              Public money may be withdrawn from an official account without a drawing right for
               the purpose of:
                   - transferring the amount to another official account of the agency; or
                   - establishing or reimbursing a cash advance approved by your Chief
                       Executive.

        INSTRUCTIONS – Staff issued with drawing rights


              You must exercise a drawing right in accordance with any limits and conditions
               imposed on the drawing right.
              Before making a payment of public money, and exercising a drawing right, you
               must ensure that:
                    - the payment is consistent with the purposes of the appropriation under
                        which it is proposed to be made; and
                    - there is sufficient available appropriation to cover the proposed payment.
              If you are issued with a drawing right to allow the payment of an amount of
               public money which is required by law, and there is an available appropriation for that
               payment, you must exercise the drawing right in full.
                                                                      Whole of Government Model CEI Provision


1.1.   Issuing drawing rights


        INSTRUCTIONS – Staff with a delegation to issue, revoke or amend drawing rights

                                                                                      When issuing,
               revoking or amending drawing rights, you must comply with the directions in the
               delegation from the Finance Minister or any directions in the delegation from your
               Chief Executive.
              You may only issue or amend drawing rights in respect of appropriations for which
               your Chief Executive is responsible.
              You may revoke any drawing right issued by you, or your delegate.
              Where a law requires the payment of an amount of public money, and there is an
               available appropriation for that payment, you must issue sufficient drawing rights to
               allow the amount to be paid in full.
                                                                      Whole of Government Model CEI Provision




                                               111
1.1.1.   You are to ensure that drawing rights are sought or issued, in writing, where payments need
         to be made in respect of the Department’s responsibilities and operations.
1.1.2.   Drawing rights should generally be issued to a specified position(s) and be limited to be within
         available appropriation or the limit of an advance.

1.2.     Management of drawing rights
1.2.1.   You should ensure that drawing rights are reviewed regularly to ensure their currency and
         whether it requires reissuing.

2.       Delegations and directions
2.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

          Arrangements                                   Source (including list of delegates)
          Under subsections 27(1) and 27(4) of the       Financial Management and Accountability
          FMA Act, to issue, revoke or amend a           (Finance Minister to Finance Secretary)
          drawing right.                                 Delegation Instrument

          Limits apply (refer to the delegations         Internal Financial Delegations Instrument
          instruments).




                                                   112
DRAWING RIGHTS - OPERATIONAL GUIDELINE 6.1
1.       General
1.1.1.   Drawing rights are not required when:
         (a) transferring money from one bank account to another (refer to FMA Regulation 19),
         (b) withdrawing money from a bank account to establish or reimburse a petty cash advance
             (refer to FMA regulation 19); or
         (c) journaling credits/debits within the Department’s FMIS.

2.       Process guide
2.1.     Requirement for a drawing right
2.1.1.   Staff members are to confirm the requirement for a drawing right (third party or internal
         drawing right). Section 26 of the FMA Act requires a valid drawing right to be held for the
         following functions:
         (a) make a payment of public moneys for a specified purpose;
         (b) request that an amount be debited against a particular appropriation; or
         (c) debit an amount against a particular appropriation.
2.1.2.   In seeking delegate approval to issue, amend or revoke a drawing right, staff members should
         follow the processes outlined at Attachment A of this Guideline.

2.2.     Delegates
2.2.1.   Section 27 of the FMA Act permits the Finance Minister (or their delegate) to issue drawing
         rights to staff members so that they may legally perform any of the tasks associated with
         drawing funds out of the Consolidated Revenue Fund (CRF).
2.2.2.   Authorised delegates under section 27 of the FMA Act may issue drawing rights in respect of
         the Whole of Australian Government (WoAG) functions of the Department or in respect of the
         non-WoAG functions.
2.2.3.   The Finance Minister has delegated the authority to issue drawing rights to Chief Executives
         of FMA agencies. In this Department, the Secretary has subsequently delegated the issuing
         of drawing rights to the Chief Financial Officer in respect of non-WoAG functions and the
         Deputy Secretary, Financial Management Group in respect of WoAG functions of the
         Department.
2.2.4.   A delegate may issue a delegation under FMA section 27 to the Chief Executive or officer of
         the other agency, providing them with the power to issue, revoke and amend drawing rights in
         respect of the Department’s appropriations.

2.3.     Issuing drawing rights
2.3.1.   Staff members seeking a drawing right should provide the delegate with sufficient information
         to allow them to determine the validity of the drawing right request (this includes information
         regarding Administrative Arrangements Order changes, legal advice or information regarding
         the appropriation).
2.3.2.   When drawing rights are issued, the terms of the arrangement between the parties should be
         defined in the drawing right instrument.
2.3.3.   Third party drawing rights should be issued at the same time (or copies attached) as
         Appropriation and Cash Management Module (ACM) access or direct debit request.

2.4.     Using drawing rights
2.4.1.   Internal drawing rights: Staff members provided with drawing rights are to ensure that they
         adhere to any limits and conditions placed on the drawing right and report any instances of
         non-compliance as part of the departmental Certificate of Compliance reporting.



                                                   113
2.4.2.   Third party drawing rights: Where drawing rights have been issued to another agency, staff
         members should routinely seek confirmation of ongoing compliance, with the agency reporting
         any instances of non-compliance with the drawing right as soon as possible to the
         Department. When issued a drawing right by other agencies, staff members are to adhere to
         any limits and conditions and report any instances of non-compliance as appropriate.

2.5.     Management of drawing rights
2.5.1.   Drawing rights are to be reviewed regularly to confirm their currency and sufficient
         documentation on each kept as to the history of the instrument in the register.
2.5.2.   Drawing rights should be reissued as required, including following changes to the ‘Financial
         Management and Accountability (Finance Minister to Finance Secretary) Delegation’ and
         Internal Financial Delegations instruments.

2.6.     Revoking or reissuing a drawing right
2.6.1.   Where a drawing right is no longer valid, a written instrument of revocation should be
         prepared. Staff members are to provide the delegate with sufficient documentation to support
         the request. Staff members should liaise with the drawing right user prior to issuing the
         revocation to ensure any outstanding matters are addressed.
2.6.2.   Where a drawing right already exists and a new drawing right is invoked, the original drawing
         right is revoked.
2.6.3.   Drawing rights issued by a delegate other than the Finance Minister are generally revoked
         each time the Finance Minister issues a new/updated FMA Delegation instrument (both to the
         Secretary or other agency Chief Executives). Staff members should ensure drawing rights
         are reissued as needed.

2.7.     Incorrect action
2.7.1.   In the event that there is non-compliance in the provisions (ie: terms) of drawing rights, the
         Chief Financial Officer is to be notified. The Chief Financial Officer is to promptly implement
         appropriate remedial action and report the non-compliance.

2.8.     Funds flow process
2.8.1.   Third party drawing rights are generally complemented by ACM access or direct debit
         request. The two stages of the funds flow process are:
         (a) Part A: transfers of approved appropriations from the Official Public Account of the
              requesting agency to their official bank account.
         (b) Part B: where there is an arrangement for a direct debit on a third party drawing right, the
              payment of the appropriation by the Department to the third party.
2.8.2.   In respect of Part A: The official central accounts of Government are maintained by the
         Department (through Financial Management Group). Agencies submit requests through the
         ACM for transfer of funds to their agency bank account. Funds are then transferred from the
         Official Public Account to agency bank accounts.
2.8.3.   In respect of Part B: Where the third party does not draw down on the appropriation directly
         but has a direct debit request in place in order to obtain appropriation funds through the
         Department’s bank account, this process comes into effect in the funds flow process.

2.9.     Appropriation accounts
2.9.1.   Agencies are obliged to debit appropriation accounts in their own sets of accounting records.
         The Treasury, Taxation and Asset Management Team has the responsibility for maintaining
         the records of all movements in the balances of appropriations relating to the Department.
2.9.2.   Staff members are to ensure that:
         (a) the appropriation allocation(s) is recorded correctly in the FMIS;
         (b) the proposed debiting is from the correct appropriation;



                                                   114
         (c) any changes to the approved level of the appropriation, due to a transfer of functions
             under FMA section 32, an agreement under FMA section 31 or determination are
             promptly reflected in the amount of the appropriation; and
         (d) system checks are in place to prevent total debits against an appropriation exceeding the
             relevant appropriation.
2.9.3.   Staff members who debit appropriations are required to hold a drawing right for that purpose.
2.9.4.   Staff members who have the power to authorise another staff member to debit an
         appropriation are required to hold a valid drawing right.


3.       Controls
3.1.1.   The key controls in relation to drawing rights are:
         (a) all cheque signatories, petty cash advance holders and Electronic Funds Transfer staff
             members are required to be issued with a valid drawing right before they make any
             payment of public money;
         (b) regular reviews and maintenance of a register by the Treasury, Taxation and Asset
             Management Team, Financial Operations Branch of all drawing rights issued or used;
         (c) before any payment is made, staff members are to ensure that:
             (i) the proposed payment is from the correct appropriation;
             (ii) the payment has been approved in accordance with the FMA legislation (FMA
                   regulation 9) or other legislation; and
             (iii) that system checks are in place to prevent total debits exceeding the relevant
                   appropriation.
         (d) Internal and external audits.

4.       Reference topics
4.1.     Outsiders
4.1.1.   Drawing rights do not apply to persons outside the Commonwealth (arrangements covered by
         FMA section 12 or that establishes outsiders as allocated officials). Drawing rights in relation
         to these financial activities are instead exercised within the Department.

4.2.     Requesting debits against an appropriation
4.2.1.   The authority to request a debit against an appropriation was required by all agencies in
         former times when this Department paid all accounts for the Commonwealth. This function
         may still be required when third parties (outsourced providers or other agencies) lodge
         requests to a central office of an agency to make payments, on their behalf. Section 26 of the
         FMA Act requires a drawing right to be held by staff members before this action is
         undertaken.

4.3.     Reporting
4.3.1.   Third party payments from and on behalf of other agencies are to be reported as required (for
         example in Portfolio Budget Statements).

4.4.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997




                                                   115
        Finance Circular      2011/07 - Certificate of Compliance - FMA Act Agencies
                              2009/07 – Issuing and Exercising Drawing Rights
                              2009/01 – An Introduction to Special Accounts
                              2008/09 - Appropriations for Payment to CAC Act bodies
                              2006/10 – Appropriation Arrangements for Employee
                               Compensation Payments
                              2006/07 – Debits to Official Administered Receipts Accounts
                              2005/13 – Allocation of responsibilities for special appropriations
                              2004/16 – Appropriation Management: Responsibilities of
                               Agencies
                              2004/06 – Appropriations and the Consolidated Revenue Fund
                              2003/10 – Special Instruction regarding Special Public Money
                              2003/07 – Agency Banking Framework Guidance Manual
        Forms                 Drawing right template, refer: Finance Circular 2009/07 – Issuing
                               and Exercising Drawing Rights.
        Other                 Drawing Rights Flow Chart – Attachment A

4.5.   Key contacts

        Branch               Contact for Assistance on:
        Treasury,           Drawing rights within the Department, to other agencies and from
        Taxation & Asset     other agencies.
        Management          Debiting of appropriations (through ACM) and official bank
        Team, Financial      accounts.
        Operations
        Branch
        Legal Services      Drafting of drawing rights instruments.
        Branch
        Procurement         This CEI and Operational Guideline.
        Assistance and      Internal Delegation issues.
        Financial Policy
        Team




                                              116
4.

ATTACHMENT A: OPERATIONAL GUIDELINE 6.1 - DRAWING RIGHTS FLOW
CHARTS




                               117
118
119
MAKING PAYMENTS - CHIEF EXECUTIVE INSTRUCTION 6.2 (V1 – 07/2012)

1.       General
1.1.1.   The payment of accounts is an important aspect of promoting the proper use of resources.


          Section 44 of the FMA Act places a special responsibility on Chief Executives to manage
          the affairs of their agencies in a way that promotes the proper use of Commonwealth
          resources. To ensure proper controls on payments of public money, some Chief
          Executives nominate particular staff members in their agencies to authorise or make
          payments. Other Chief Executives use internal controls linked to their automated payment
          systems to ensure proper payments of public money.
                                                                       Whole of Government Model CEI Provision


1.2.     Paying accounts
1.2.1.   Senior Executive Service staff (SES), Directors (Executive Level 2) and Cost Centre
         Managers/State Managers/Project Directors may authorise the payment of accounts where
         they can certify that it is a proper use of public money.
1.2.2.   The Chief Financial Officer, Assistant Secretary, Financial Services Branch, Financial
         Operations Branch or staff members with responsibility for contracts, may authorise all
         accounts for payment (in particular bulk accounts), acting on advice from Legal Services
         Branch if any material conflicts arise.
1.2.3.   In instances where an invoice relates to the Department and another agency/organisation,
         you should not authorise payment unless the other party has provided written agreement to
         the payment of their component.
1.2.4.   You should not authorise payment where it could represent a real or perceived conflict of
         interest.

1.3.     Payments pending probate
          A payment pending probate relates to an amount which the Commonwealth owes to a
          person at the time of their death. FMA Regulation 30 gives the Finance Minister the power
          to authorise payment of such an amount to the person who the Finance Minister considers
          should receive the payment without requiring production of probate of the will or letters of
          administration of the deceased person’s estate. This power has been delegated to all agency
          Chief Executives, who in most cases have sub-delegated it to certain agency
          staff members.

          INSTRUCTIONS – all staff



                 You must not authorise a payment pending probate under FMA Regulation 30,
                  unless you have been delegated the authority to do so.
                 If a payment pending probate has been authorised by your Chief Executive or a
                  delegate, before making the payment you must ensure that there is an available
                  appropriation for the payment and that you have a valid drawing right to allow the
                  payment (see instructions under “Drawing Rights” in this CEI).

          INSTRUCTIONS – Staff with a delegation to authorise payments pending probate



                 When authorising a payment pending probate, you must comply with any



                                                 120
                   directions in the delegation from the Finance Minister, or in the delegation from your
                   Chief Executive.
                  If your agency owes an amount to a person at the time of their death, you may
                   authorise payment of that amount to the person who you consider should receive the
                   payment.

                  When deciding who should be paid, you must have regard to the persons who are
                   entitled to the property of the deceased person under that person’s will or the law
                   relating to the disposition of the property of deceased persons.
                  You may authorise the payment without requiring production of:
                        - probate of the will of the deceased person; or
                        - letters of administration of the deceased person’s estate.
                  Before authorising the payment, you must ensure that the payment is not covered by
                   other legislation.
                                                                            Whole of Government Model CEI Provision


1.3.1.   Where the Department owes money to a person at the time of their death, the Chief Financial
         Officer may authorise the payment of that money to satisfy that debt.

2.       Arrangements not covered by this CEI
2.1.1.   This guidance does not apply to Parliamentarians, former Office holders or staff employed
         under the Members of Parliament (Staff) Act 1994. All queries relating to these categories
         should be referred to the Ministerial and Parliamentary Services Division, Asset Management
         and Parliamentary Services Group.

3.       Delegations and directions
3.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

          Arrangements                                      Source (including list of delegates)
          Under FMA regulation 30 approve the               Financial Management and Accountability
          payment to the person who the delegate            (Finance Minister to Finance Secretary)
          considers should receive the payment, of an       Delegation Instrument
          amount which, at the time of a person’s
          death, the Commonwealth owed to the               Internal Financial Delegations Instrument
          person.

          Limits apply (refer to the delegations
          instrument).

3.1.2.   In addition, the following responsibilities are also applicable:

          Position                  Responsibility
          Departmental Senior           In accordance with section 44 of the FMA Act (when
          Executive Service            approving the payment of accounts) ensure that is it a proper
          staff (SES)                  use of Commonwealth resources.

          Directors
          (Executive Level 2)

          Cost Centre
          Managers/State
          Managers/Project
          Directors
          Chief Financial                Ensure systems accurately record financial transactions and
          Officer                       produce reliable financial reports.
                                       Ensure that all legal directions, entitlements and obligations are
                                        considered before authorising payment and seek assistance



                                                     121
Position              Responsibility
                         from Legal Services Branch as necessary.
Staff members using    Responsible for the prompt reconciliation of their usage when
or responsible for       the account is provided and for notifying the Director, Financial
departmental             Operations Branch immediately of any discrepancies.
services




                                      122
3.       MAKING PAYMENTS - OPERATIONAL GUIDELINE 6.2

1.       General
1.1.1.   Accounts are to be paid in accordance with any terms and conditions specified in the contract,
         agreement or other arrangement agreed to. In the absence of any specific term or condition,
         Staff members are to apply the Department’s standard payment terms (within 30 days of the
         receipt of satisfactory goods and services, and a correctly rendered invoice).
1.1.2.   The preferred method for making a payment is electronic.

2.       Process guide
2.1.     Validate
2.1.1.   Authorised staff members may approve the payment of accounts, where they can certify that
         it is a proper use of public money and that:
         (a)       the good or service has been received and is not subject to any legal impediment or
                   dispute; and
         (b)       there is written approval under FMA Regulation 9 (and 10, if required), or other
                   relevant legislation, and the invoice amount is within that approval; and
         (c)       the expenditure will be paid in the name of the payee, agent or other legally entitled
                   party; and
         (d)       a contract has been raised in the FMIS for all consultancies and other procurements
                   of $10,000 (GST inclusive) and over; and
         (e)       a purchase order has been raised in the FMIS for procurements of $10,000 (GST
                   inclusive) and over; and
         (f)       the invoice amount correctly reflects the terms of any associated arrangement that
                   was entered into; and
         (g)       the expenditure is recorded against the correct charge code(s); and
         (h)       the invoice is a properly rendered GST-compliant tax invoice and is an original or
                   authorised duplicate.
2.1.2.   In relation to contracted arrangements, staff members must also ensure that any payment,
         including periodic or progress payment, has been verified by the Contract Manager as due
         and payable within the terms of the contract.

2.2.     Accounts processing
2.2.1.   Payments may be generated directly or indirectly (through the use of arrangements such as
         Cabcharge, Commonwealth credit cards, mobile phones, leased vehicles, Financial Services
         Centre (FSC) or petty cash). Some indirect payments are acquitted through the expense
         management system (iCMS), with others being processed by the relevant area, in
         consultation as needed with the teams in the Financial Operations Branch.
2.2.2.   The Accounts Processing Unit is to process the payment of general invoices and non-
         procurement related payments as well as processing credit notes. A checklist for paying such
         invoices is at Attachment A of this Guideline.
2.2.3.   The Treasury, Taxation and Asset Management Team are responsible for processing bulk
         accounts or special payments, such as overseas payments:
         (a)     requests for payments with the relevant details/approvals which are forwarded for
                 payment and transfer (similar information used for normal invoice payments should be
                 provided) ; and
         (b)     in respect of bulk accounts, payments are to be made as per contracted
                 arrangements and acquittals through systems such as the expense management
                 system (iCMS) completed and then reconciled to address disputed payments etc.




                                                   123
3.       Payments pending probate
3.1.     General
3.1.1.   Proposals to make a payment pending probate do not constitute a proposal to spend public
         money for the Commonwealth. The amounts are already owing to the deceased person and
         have previously been approved. An amount owing indicates it has not been paid.
3.1.2.   FMA regulation 30 is the authority for the payment of money pending probate. This does not
         prevail over legislation which has specific provisions for payments of amounts on the death of
         employees, such as subsection 17(5) of the Long Service Leave (Commonwealth Employees)
         Act 1976. Staff members should ensure that care is taken to ensure that any proposed
         payments are not covered by the specific provisions of other legislation.

3.2.     Payments pending probate approval process
3.2.1.   Any claim submitted by a representative of a deceased person, prior to the declaration of
         probate, should be assessed by an appropriate delegate to determine if the Commonwealth
         owes, at law, an amount to the deceased person.
3.2.2.   The delegate must obtain a signed statement from the claimant (payee) which includes:
         (a) the full name of the claimant;
         (b) the relationship of the claimant to the deceased;
         (c) the full name of the deceased;
         (d) the date of death;
         (e) details of the account the payment should be deposited into: and
         (f) details of the executor and beneficiaries named in the deceased person’s will or if there
              is no will, the names of persons other than the claimant who might have an interest in the
              estate.
3.2.3.   In considering the case, the delegate should:
         (a) sight a certificate of death or other evidence of death;
         (b) be satisfied that an amount is payable and determine whether GST applies;
         (c) ensure that the person to whom the payment is being made is the person entitled to the
              money; and
         (d) ensure that the payment is not covered by any other legislation.

3.3.     Payments pending probate and taxation
3.3.1.   Where a payment is made without any attached consideration, no GST consequences arise.
         Where the recipient of the payment pending probate has made a supply (a taxable supply) in
         return for the payment, the payment will incur GST.

3.4.     Delegate approval and follow up
3.4.1.   Following delegate approval, the payment can be made by attaching the approval and details
         for payment to an Accounts Payable form which is to be sent to the Accounts Processing Unit,
         Financial Operations Branch.
3.4.2.   The recipient should be advised in writing of the payment and that it does not, in any way,
         relieve them of the payment of their legal responsibility to deal with the payment in full
         accordance with the law. In addition, after the payment is made, the Commonwealth will have
         no further liability in respect of the payment.

4.       Controls
4.1.1.   The key controls in relation to making payments are:
         (a) financial delegation levels, accreditation and certificate of compliance reporting;
         (b) Financial Operations Branch scrutinises payments to establish that the account can be
             paid, including checking the authorising signature, completing a vendor verification
             (including ABN), checking that the account has not been previously paid and cross
             checking the invoiced amount against the payment amount;



                                                  124
         (c) separation of duties in respect of the processing of accounts, payment runs and creation
             of vendors/creditors;
         (d) suspicious transactions reporting processes;
         (e) internal and external audits.

5.       Reference topics
5.1.     Prepayments and discounts
5.1.1.   The requirements outlined in Finance Circular 2004/14: Discounts for prepayment and early
         payment’ should be complied.

5.2.     Vendors
5.2.1.   Bank account details should be obtained for all new vendors so that payments can be made
         electronically. Payments by cheque will only be made where exceptional circumstances exist,
         such as the vendor having limited access to electronic banking facilities.

5.3.     Supporting documentation
5.3.1.   Supporting documentation must be provided for all expenditure.
         (a) For expenditure under $82.50 a receipt should be provided as supporting documentation.
         (b) For all purchases over $82.50 (GST inclusive) a valid tax invoice must be obtained.
5.3.2.   Where a valid tax invoice is not available, a statutory declaration should be provided.

5.4.     Key references

          Legislation            Financial Management and Accountability Act 1997
                                 Financial Management and Accountability Regulations 1997
                                 Members of Parliament (Staff) Act 1994
                                 Public Service Act 1999
          CEIs/Operational       2 – Committing to Spend Public Money
          Guidelines             5 – Credit Cards
                                 7.4 – Cash advances (including petty cash and cash floats)
          Finance Circular       2011/01 – Commitments to Spend Public Money (FMA
                                  Regulations 7-12)
                                 2008/10 – Procurement 30 Day Payment Policy for Small Business
                                 2004/14 – Discounts for prepayment and early payment
                                 2003/10 – Special Instruction regarding Special Public Money
          Forms                  Create or Modify Vendor Details form
                                 Accounts Payable form
                                 Credit Memo form
                                 Authority for EFT Direct Credit Payment
          Other                  iCMS
                                 FMIS (SAP)
                                 Checklist for making payment of invoices – Attachment A

5.5.     Key contacts

          Branch              Contact for Advice on
          Legal Services       Conflicts of interest.
          Branch               Probate.
          Procurement          This CEI and Operational Guideline.
          Assistance and       Internal Delegation issues.
          Financial Policy
          Team, Financial
          Services Branch




                                                 125
Branch               Contact for Advice on
Accounts              Payment of accounts, including credit notes.
Processing Unit,      Creation and maintenance of vendors.
Financial             Petty cash.
Operations            CabCharge.
Branch
Treasury,               Commonwealth credit cards
Taxation and            Bulk accounts processing.
Asset                   iCMS acquittals.
Management
Team, Financial
Operations
Branch
Group Financial         iCMS access.
Advice Team,            Invoice coding.
Financial Services
Branch




                                       126
ATTACHMENT A – OPERATIONAL GUIDELINE 6.2 – MAKING PAYMENTS

CHECK LIST FOR M AKING PAYMENT OF INVOICES
If you have any enquires please contact the Accounts Processing Unit on x3766.

       Step 1: Invoice must be date stamped when received into the Department.
        This is the Received Date.

       Step 2: Valid Tax Invoice must be provided by the supplier.
        Please use the attached checklist.

       Step 3: If the invoice is over $10,000 a contract needs to be raised first in the FMIS (SAP) and
       then a purchase order.
        Stamp the invoice with a purchase order stamp and enter the purchase order number
        A signature of the officer who prepared the form
        A signature of the delegate authorising the payment

       Step 4: Each invoice or other supporting material (if not a procurement) must be stapled to an
       Accounts Payable form (located on the intranet). All relevant elements of the Accounts
       Payable form must be completed and must have:
        Cost Centre
        GL account code
        Amount
        A signature of the officer who prepared the form; and
        A signature of the delegate authorising the payment.
       In respect of the tax code, refer table below:


           SAP Tax Codes     Description

                C0           Capital Acquisitions with no-GST in the price
                C1           Ordinary Capital GST Acquisitions
                O0           Out of Scope item - No GST
                P0           Acquisitions with no-GST in the Price
                P1           Ordinary GST Acquisitions
                PI           Acquisitions for making Input Tax eg ACS sale trns

       Step 5: Only the current amount shown on the invoice will be processed
        No overdue or outstanding amounts are processed as this has the potential to result
           in double payments being made. If in doubt, contact the Accounts Processing Unit.

       Step 6: To ensure your invoices are processed on time:
        The Department is required to pay all accounts within 30 days of a correctly rendered
           receipted invoice, unless the contract states otherwise.
        The Department performs (2) payment runs per week – Tuesday and Thursday.
        Invoices must be with the Accounts Processing Unit a minimum of 2 working days prior to
           each payment run ie: COB Thursday for Tuesday’s payment run and COB Monday for
           Thursday’s payment run or earlier where there is a public holiday.
        If the invoice is required to be paid before the 30 days you must mark the invoice/AP form
           with “pay ASAP”.

       Step 7: Once your invoice reaches the Accounts Processing Unit:
        Each invoice is date and time stamped to record receipt by the Accounts Processing Unit.
        Invoices are entered within a 48 hour turnaround.
        All invoices are filed and stored by the Accounts Processing Unit for future reference.



                                                      127
      

CHECK LIST FOR M AKING PAYMENT OF INVOICES- CONTINUED


           TAX INVOICE CHECKLIST SUPPLIERS REGISTERED FOR GST
                                                           TAX INVOICE          TAX INVOICE
                     REQUIREMENTS                             < $1,000             >$1,000
                                                             (GST inc)            (GST inc)
    ‘Tax Invoice’ stated prominently
                                                                                    
    Date of issue
                                                                                    
    Name of supplier
                                                                                    
    ABN of supplier
                                                                                    
    Name of recipient                                     Not required/
                                                                                     
                                                           Best Practice
    Address or ABN of recipient
                                                            Not required             
    Brief description of each good/service supplied
                                                                                    
    For each description of the good/service
     supplied, the quantity of the goods or the extent      Not required             
     of the services supplied
    The GST inclusive price of the taxable supply
                                                                                    
 
                             th
     The GST payable =1/11 of total price:
     - Statement like ‘Total price include GST’ or                                  
     - The total amount of GST
 
                           th
     The GST payable <1/11 of total price either:
     - The amount payable, excluding GST; and                                       
     - The total amount of GST

          Note: There is no requirement to issue a Tax Invoice where the value of
          the supply is $82.50 (including GST) or less, but there should always be
                                  evidence of the purchase.




                                                128
DISCRETIONARY COMPENSATION MECHANISMS - CHIEF EXECUTIVE
INSTRUCTION 6.3 (V1 - 07/2012)

1.   Overview

     Discretionary compensation mechanisms allow the Australian Government to provide
     assistance to individuals or other bodies that have no automatic entitlement to a payment or
     other financial relief. A decision under any of these mechanisms is at the discretion of the
     decision maker.

     The absence of any entitlement to payment or relief distinguishes the discretionary
     compensation mechanisms from other mechanisms such as the settlement of claims for
     which there is at least a meaningful prospect of liability under the Legal Services
     Directions 2005, or the payment of compensation arising from a statutory entitlement.
                                                                   Whole of Government Model CEI Provision


2.   Scheme for Compensation for Detriment caused by Defective
     Administration (CDDA Scheme)

     The CDDA Scheme allows FMA Act agencies to compensate individuals or other bodies
     who have experienced detriment (i.e. quantifiable financial loss) as a result of an agency’s
     defective administration, and who have no other avenues of redress.

     The CDDA Scheme is established under the executive power in section 61 of the
     Constitution. While Portfolio Ministers have responsibility for decisions made under the
     CDDA Scheme, they may authorise agency staff members to approve payments under the
     CDDA Scheme on their behalf.

     INSTRUCTIONS – all staff

            You must refer claims for compensation arising from defective administration to the
             relevant Minister or a person with the authority to decide such claims.
            If a CDDA payment has been approved by a Minister, or a person authorised by a
             Minister, before making the payment you must ensure that:
                  - the requirements of FMA Regulations 7-12 have been met (see CEI -
                     Committing to Spend Public Money);
                  - there is an available appropriation for the payment; and
                  - you have a valid drawing right to make the payment (see instructions under
                     “Drawing Rights” in this CEI).
                                                                   Whole of Government Model CEI Provision




                                             129
3.   Act of grace payments

     Section 33 of the FMA Act enables the Finance Minister to authorise the making of one-off
     or periodic act of grace payments. This power has been delegated with directions to the
     Finance Secretary and delegates within Finance.

     Act of grace payments may be approved in special circumstances to individuals or other
     bodies where an agency’s conduct or Commonwealth legislation or policy has resulted in an
     unintended, inequitable or inconsistent effect. Act of grace payments are used where the
     main obligation to the applicant is moral, rather than legal.

     INSTRUCTIONS – all staff

           You must refer requests for an act of grace payment to a delegate with the power
            to decide such requests.
           If an act of grace payment has been approved by the Finance Minister or a
            delegate, before making the payment you must ensure that:
              - the requirements of FMA Regulations 7-12 have been met (see CEI –
                  Committing to Spend Public Money);
              - there is an available appropriation for the payment; and
                  you have a valid drawing right to make the payment (see instructions in
                  “Drawing Rights” in this CEI).

     INSTRUCTIONS – Staff with a delegation to authorise act of grace payments

           If you consider it appropriate to do so because of special circumstances, you may
            approve a one-off or periodic act of grace payment.
           When approving an act of grace payment, you must comply with the directions in the
            delegation from the Finance Minister or any directions in the delegation from your
            Chief Executive.
           You may attach conditions to an act of grace payment.
                                                                 Whole of Government Model CEI Provision




                                           130
4.       Ex gratia payments

          Ex gratia payments enable the Australian Government to deliver financial relief at short
          notice. They are used when urgent, unforseen and exceptional circumstances arise and
          generally only after full consideration of all other possible alternative compensation
          mechanisms have been explored. In particular, consideration should be given to whether it is
          really necessary to resort to pay ex gratia payment if the desired outcome can be achieved
          through existing Commonwealth legislative provisions.

          The authority to make ex gratia payments comes from the executive power of the
          Commonwealth in section 61 of the Constitution. Decisions on ex gratia payments are
          always made by the Prime Minister and/or Cabinet.

          INSTRUCTIONS – all staff

                 You may only seek approval for an ex gratia payment from the Prime Minister
                  and/or Cabinet.
                 If an ex gratia payment has been approved by the Prime Minister and/or Cabinet,
                  before making the payment you must ensure that:
                    - the requirements of FMA Regulations 7-12 have been met (see CEI –
                        Committing to Spend Public Money);
                    - there is an available appropriation for the payment; and
                    - you have a valid drawing right to make the payment (see instructions under
                        “Drawing Rights” in this CEI).
                                                                          Whole of Government Model CEI Provision


5.       Reporting
5.1.1.   Special Claims and Land Policy Branch (SCALPB) must maintain a register of requests and
         approvals actioned by them.
5.1.2.   Payments made by the Department must be reported as required.

6.       Delegations and directions
6.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

          Arrangements                                    Source (including list of delegates)
          Under section 33 of the FMA Act, to             Financial Management and Accountability
          authorise the making of an act of grace         (Finance Minister to Finance Secretary)
          payment.                                        Delegation Instrument

          Limits apply (refer to the delegation           Internal Financial Delegations Instrument
          instruments)
          The authority to make CDDA payments             Finance Minister Determination
          comes from the executive power of the
          Commonwealth under section 61 of the
          Constitution. The CDDA Scheme operates
          on the basis of authority provided to
          individual portfolio Ministers.

          The Prime Minister and/or Cabinet has           NA
          authorisation to approve ex gratia
          payment.




                                                    131
6.1.2.   In addition, the following responsibilities are also applicable:

          Position                   Responsibility
          Assistant Secretary,         Monitor and advise the Chief Financial Officer and
          Special Claims and             Assistant Secretary, Legal Services Branch of changes
          Land Policy Branch,            to policy/authorisations relating to CDDA and act of
          AMPS                           grace.
                                       Ensure all requests are provided in a timely manner to
                                         the Finance Minister/delegate for consideration.
                                       Maintain a register of claims and report as required.
          Deputy Secretary             Ensure that the causes of an administrative defect by
                                         the Department are identified and corrected.
                                       Determine whether disciplinary action is to be initiated
                                         against the person(s) responsible for any case of
                                         defective administration.
                                       Review and endorse/not endorse requests from their
                                         Business Group.
                                       Advise the Chief Financial Officer of any payments
                                         made during the financial year which relate to their
                                         operations.
          Chief Financial Officer      In consultation with SCALPB, ensure that the amounts
                                         paid out during the financial year for are reported as
                                         required.




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DISCRETIONARY COMPENSATION MECHANISMS – OPERATIONAL GUIDELINE 6.3

1.       Overview
1.1.1.   Requests relating to the Department’s discretionary compensation mechanisms should be
         forwarded through the relevant Deputy Secretary, with details of their endorsement/non-
         endorsement of the claim, to the Special Claims and Land Policy Branch (SCALPB).
1.1.2.   Requests that do not relate to the Department should be referred directly to SCALPB.
1.1.3.   ‘Finance Circular 2009/09 – Discretionary Compensation and Waiver of Debt Mechanisms’
         contains detailed guidance.

2.       Role of the special claims area
2.1.1.   SCALPB has responsibility for coordinating discretionary compensation mechanisms, in
         respect of Act of Grace requests they administer requests for all FMA Act agencies.
2.1.2.   SCALPB must:
         (a)     in the briefing, ensure that the Minister, or delegate, has sufficient information and
                 evidence to make an informed decision on whether to approve or deny any request;
         (b)     notify the relevant area/agency of all decisions, and in relation to approvals advise on
                 how payments can be arranged and any conditions attached to the approval;
         (c)     notify the claimant in writing (following the requirements in the guidance) of the
                 decision, including any conditions attached or review rights.

3.       CDDA Scheme
3.1.     General
3.1.1.   The public looks to Australian Government departments and agencies to administer
         legislation and policy, and to deliver outcomes in a responsible, equitable, accurate and
         appropriate manner. Members of the public also expect unambiguous and accurate
         information and advice, as appropriate to their circumstances. When a department/agency
         acts in an unreasonable way or provides incorrect or ambiguous information or advice, those
         actions may cause a person to suffer financial or non-financial loss. There is a general
         expectation that the department/agency will make good that loss, even if it does not have the
         status of a legal loss.
3.1.2.   The ‘Scheme for Compensation for Detriment caused by Defective Administration’ (CDDA
         Scheme) was established in October 1995 to enable Australian Government agencies to
         compensate persons who have been adversely affected by defective actions or inaction of
         those agencies, but who have no other avenues of redress.
3.1.3.   The authority to make CDDA payments comes from the executive power of the
         Commonwealth under section 61 of the Constitution. The CDDA Scheme operates on the
         basis of authority provided to individual portfolio Ministers.
3.1.4.   The power to authorise CDDA payments has been passed to the Secretary.

3.2.     Exclusions
3.2.1.   CDDA payments do not apply to all claims and should only be used where there is no other
         viable avenue to provide redress to an individual.
3.2.2.   Compensation payments are not to be made:
         (a)     to overcome the effects of specific legislative provisions that are found to be flawed;
         (b)     to offset the payment of any recoverable debt owed to the Australian Government –
                 even if the debt arose through defective administration; and
         (c)     to meet claims which had previously been determined to be covered under the Act of
                 Grace provisions.




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3.2.3.   Such claims and requests should rather be handled under one of the following:
         (a)     Overcoming specific flawed legislation – management through statutory remedies by
                 either seeking an amendment to the specific legislation or by resort to the statutory
                 Act of Grace power.
         (b)     Payment of a recoverable debt – the statutory remedies providing the power to waive
                 debts to the Commonwealth should not be circumvented by administrative action.
         (c)     Claims under litigation.
         (d)     Act of Grace claims.

3.3.     Process Guide – CDDA
3.3.1.   Assessments are to be undertaken in accordance with the guidelines published in Finance
         Circular 2009/09 – Discretionary Compensation and Waiver of Debt Mechanisms, which
         includes a generic claim form.

3.4.     CDDA payments
3.4.1.   In general, CDDA payments should be funded through departmental appropriations and
         reported under the relevant departmental outcome.
3.4.2.   If authorised to approve a proposal to spend public money, you are not to approve a payment
         proposal unless the Secretary has given approval to make a compensation payment for
         defective administration.
3.4.3.   You should complete an ‘Accounts Payable Form’, attach relevant documentation
         substantiating the payment, and forward all paperwork to the Accounts Processing Unit,
         Financial Operations Branch (refer to CEI 6.2 – Making Payments).

4.       Act of grace payments
4.1.     General
4.1.1.   The act of grace power is a unique power given to the Finance Minister under the Financial
         Management and Accountability Act 1997 (FMA Act). It allows the Finance Minister to make
         one-off or ongoing payments to persons or entities who have been unintentionally
         disadvantaged by the effects of Australian Government legislation, policy or actions and who
         have no other avenue of redress. The ‘Financial Management and Accountability (Finance
         Minister to Finance Secretary) Delegation Instrument’ and the ‘Internal Financial Delegations
         Instrument’ should always be referred to in order to confirm current delegate(s) and the rule
         and limits governing that delegation.
4.1.2.   Act of grace payments are not appropriate where the Commonwealth has a legal liability or
         where other avenues of assistance are available. As such, the act of grace mechanism is
         generally a remedy of last resort.

4.2.     Process guide – Act of grace requests
4.2.1.   Requests for an act of grace payment are to be made in writing through the ‘Application for an
         Act of Grace Payment’ form. Face-to-face meeting are generally not conducted.
4.2.2.   Assessments are to be undertaken in accordance with the guidelines published in Finance
         Circular 2009/09 – Discretionary Compensation and Waiver of Debt Mechanisms.

4.3.     Act of grace payments likely to exceed $250,000
4.3.1.   If a proposed act of grace payment is likely to exceed $250,000, before making a decision,
         the Finance Minister is required to first consider a report of an Advisory Committee (FMA
         regulation 29). However, the Finance Minister is not obliged to accept the Advisory
         Committee’s recommendation.




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4.4.     Conditions
4.4.1.   Conditions may be attached to act of grace payments. If a condition is breached, the
         payment may then be recovered as a debt due to the Commonwealth. In this regard, you
         should consider CEI 9 – Managing Debt.

4.5.     Payment
4.5.1.   Act of grace payments are not specifically provided for by the Parliament in an Appropriation
         Act. They are therefore ‘special gifts of money’ by the Commonwealth. They are similar to
         the historical Royal Prerogative for ‘grace and favour payments’.
4.5.2.   Only upon the Minister or delegate authorising an Act of Grace payment can payment made
         to the individual or entity.
4.5.3.   Payments should be paid by the agency responsible for the relevant program and from the
         existing resources under the applicable outcome.
4.5.4.   For act of grace payments relating to this Department, staff members should complete an
         ‘Accounts Payable Form’, attach relevant documentation substantiating the payment, and
         forward all paperwork to the Accounts Processing Unit, Financial Operations Branch (refer to
         CEI 6.2 – Making Payments).
4.5.5.   Act of grace payments are funded and reported under a departmental appropriation and
         outcome of the agency to which the Act of Grace request relates. The number and quantum
         of payments must be included in the notes to the Department’s annual financial statements.

5.       Ex gratia payments
5.1.     General
5.1.1.   Ex gratia payments enable delivery of financial relief at short notice. They are used when
         urgent, unforseen and exceptional circumstances arise, where there are no alternative
         mechanisms. Staff members should advise the Minister of any issue that may give rise to the
         need for an ex gratia payment in the future.

5.2.     Process guide – Ex gratia payments
5.2.1.   Requests are to be undertaken in accordance with the guidelines published in ‘Finance
         Circular 2009/09 – Discretionary Compensation and Waiver of Debt Mechanisms’.

5.3.     Ex gratia payments
5.3.1.   Requests are subject to the Budget Process Operational Rules. Agencies then administer
         payment of approved ex gratia payments.

6.       Controls
6.1.1.   The key controls in relation to discretionary compensation mechanisms are:
         (a)   separation of duties between the decision maker and the payment process;
         (b)   Financial Operations Branch scrutinises payments to establish that the account can be
               paid, including checking the authorising signature, completing a vendor verification
               (including ABN), checking that the account has not been previously paid and cross
               checking the invoiced amount against the payment amount;
         (c)   internal and external audits; and
         (d)   reporting requirements.




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7.       Reference topics
7.1.     Claims against the Department/Commonwealth
7.1.1.   Monetary claims against the Commonwealth (such as claims brought against the Department
         or the Commonwealth more broadly which are managed by the Department) are to be
         managed in accordance with the Legal Services Directions 2005.
7.1.2.   Minor claims for which Comcover is responsible may be settled by the Secretary or an
         authorised staff member, on the basis that the proposed settlement is in accordance with
         legal principle and practice.
7.1.3.   Major claims for which Comcover is responsible may only be settled if:
         (a)    written advice has been received from an external legal advisor affirming that the
                settlement is in accordance with legal principle and practice; and
         (b)    the Secretary (or authorised staff member) agrees with the settlement.

7.2.     Other discretionary mechanisms
7.2.1.   The mechanisms covered by this guidance are discretionary. There is no automatic
         entitlement to a payment under the compensation mechanisms or financial relief under the
         waiver of debt mechanism. This feature distinguishes payments and relief provided under
         other mechanisms such as compensation paid under statutory entitlements (ie: compensating
         losses from workplace injuries under the Safety, Rehabilitation and Compensation Act 1988).

7.3.     Key references
          Legislation                Financial Management and Accountability Act 1997
                                     Financial Management and Accountability Regulations 1997
                                     Public Service Act 1999
                                     Privacy Act 1988
                                     Administrative Arrangements Order
          CEI                        1.5 - Insurance
                                     6.2 – Making Payments
          Finance Circular           2009/09 – Discretionary Compensation and Waiver of Debt
                                      Mechanisms
          Forms                      Accounts Payable Form
                                     Application for an Act of Grace Payment form
          Other                      Financial Management and Accountability Orders (Financial
                                      Statements for reporting periods ending on or after 1 July) as
                                      issued each financial year
                                     A model Agency Illustrative Financial Statements
7.4.     Key contacts
          Branch                     Contact for Assistance on:
          Special Claims and       Advice on the discretionary compensation mechanisms matters.
          Land Policy Branch       Delegates/authorisations relating to CDDA and act of grace
          Procurement              This CEI and Operational Guideline.
          Assistance and           Internal delegations issues.
          Financial Policy
          Team
          Accounts Processing      Payment of accounts.
          Unit
          Budget Team,             Budget operational rules.
          Financial Services
          Branch
          Comcover and Legal         Settlement of claims.
          Services Branch            Legal services directions.
          HR Services Branch         Employee compensation.
          Office of Chief Audit      Comcover Insurance arrangements.
          Executive


                                                  136
137
TAXATION OBLIGATIONS - CHIEF EXECUTIVE INSTRUCTION 6.4 (V 1 – 07/2012)

1.       General
1.1.1.   The Department must comply with the recording and reporting requirements of the Fringe
         Benefits Tax Assessment Act 1986 (FBTA Act) and the A New Tax System (Goods and
         Services Tax) Act 1999 (GST Act). This is in addition to any additional taxation directions that
         may apply from time to time.

          INSTRUCTIONS – all staff



                 You must maintain appropriate records and provide information as requested to
                  enable the agency to meet its taxation obligations.
                 Before seeking approval for a spending proposal, you must:
                      - consider the potential FBT implications of the proposal;
                      - ensure that the price to be charged for the goods and/or services is inclusive
                          of GST, where applicable.
                 You must ensure that a valid tax invoice is obtained for each purchase to enable the
                  agency to claim input tax credits for the purposes of GST, where applicable.
                 You must ensure that all contracts for the acquisition or sale of goods and services
                  by the agency appropriately address taxation issues.
                                                                          Whole of Government Model CEI Provision


1.1.2.   The Department is required to have an Australian Business Number (ABN) and be registered
         for GST.

1.2.     Management of taxation requirements
1.2.1.   You are to ensure that agreements entered into by the Department contain provisions
         detailing taxation obligations of all parties.
1.2.2.   You must follow the rules regarding taxable supply (sections 9 and 10 of the GST Act)
         stipulated in the GST Act. Any determination as to whether the Department is taken to have
         made a taxable supply should be based on consideration of Division 9 of the GST Act.
1.2.3.   The Department is responsible for remitting GST on all of its sales of goods and services to
         the Australian Taxation Office (ATO). All such remittances will account for the input credits in
         accordance with the legislative requirements.
1.2.4.   Fringe Benefits Tax (FBT) is paid by the Department in respect of fringe benefits provided to a
         staff member from their employment in the Department. FBT extends to benefits that are
         provided to former or prospective staff members in connection with their past or future
         employment with the Department.
1.2.5.   The FBT year runs from 1 April to 31 March. The Department is required to lodge an annual
         return by 21 May (or the first business day after) for any fringe benefits it provided during the
         FBT year.

1.3.     Goods and Services Tax and Australian Business Numbers
1.3.1.   All contracts for the acquisition or sale of goods and services by the Department must include
         appropriate GST clauses (including identification of the GST amount).
1.3.2.   The Department is required to collect GST on goods and services provided to external
         parties.
1.3.3.   The Minister’s approval must be sought before a business entity or a GST group with related
         Australian Government entities of the Departments can apply to the ATO for a separate ABN
         and/or GST registration.


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1.4.     Tax invoices

1.4.1.   The Department should issue a valid tax invoice for all taxable sales (refer to the Tax invoice
         checklist in CEI 6.2 – Making Payments). For taxable sales worth more than $82.50
         (including GST), the Department must issue a tax invoice within 28 days of the request of the
         purchaser.

1.4.2.   To claim GST credits, the Department is to have GST records (such as tax invoices) that:
          (a) records its purchase of goods or services; and
          (b) comply with the GST laws.
1.4.3.   GST records are to be kept by the Department for a minimum of five years.

1.5.     Administration
1.5.1.   The Department must meet all GST and FBT obligations, including the completion and
         lodgement of returns, within the required timeframes.

2.       Delegations and directions
2.1.1.   While there are no delegations applicable, however the following responsibilities apply:

          Position                                           Responsibility
                                               FBT                                    GST
          Chief Financial        Maintain records of all fringe  Ensure information required by
          Officer (through        benefits provided to               legislation appears on tax
          the Financial           employees within the               invoices issued by the
          Services and            Department.                        Department.
          Financial              Prepare the Annual Return        Ensure tax invoices of suppliers
          Operations              for the Department, in the         meet legislative requirements.
          Branches)               format specified by the          Ensure current and accurate
                                  Australian Taxation Office         details of the Department are
                                  and pay any tax due by the         recorded on the Australian
                                  relevant date.                     Business Register.
                                                                   Maintain comprehensive and
                                                                     accurate records for all GST data
                                                                     in the financial management
                                                                     information system.
          Deputy                                                   Ensure staff involved with the
          Secretary                                                  acquisition and/or supply of goods
                                                                     and services, through this CEI,
          Social Club                                                comply with the GST Act and
          President                                                  relevant regulations of the
                                                                     Financial Management and
                                                                     Accountability Regulations 1997.
          First Assistant        Maintain records of all fringe
          Secretary,              benefits paid by the
          Ministerial and         Department relating to
          Parliamentary           Parliamentarians and their
          Services                staff.
          Division

          Specialist
          Financial
          Advisor,
          Ministerial and
          Parliamentary
          Services
          Division



                                                   139
TAXATION OBLIGATIONS - OPERATIONAL GUIDELINE 6.4

1.       Goods and Services Tax (GST)
1.1.     General
         Tax invoices are important for the operation of the GST system and the Department must
         issue a valid tax invoice for all taxable sales. Staff members are to contact the Accounts
         Processing Unit, Financial Operations Branch if there is a question as to when a tax invoice is
         required.

1.2.     Taxable supplies and departmental issued invoices
1.2.1.   Staff members are to follow the rules regarding taxable supply as outlined in the GST Act.
         Supply is defined in the GST Act and is any form of supply including:
          (a) a supply of goods; or
          (b) a supply of services; or
          (c) a provision of advice or information; or
          (d) a grant, assignment or surrender of real property; or
          (e) a creation, grant, transfer, assignment or surrender of any right; or
          (f) a financial supply; or
          (g) an entry into, or release from, an obligation:
              (i) to do anything; or
              (ii) to refrain from an act; or
              (iii) to tolerate an act or situation.
1.2.2.   Any determination as to whether the Department is taken to have made a taxable supply
         should be based on consideration of the GST Act.
1.2.3.   For taxable sales greater than $82.50 (including GST), the Department must issue a tax
         invoice within 28 days of the request of the purchaser.
1.2.4.   To be a valid tax invoice, at a minimum, the Department must ensure that the following
         information is included:
         (a) that the document is intended as a tax invoice (ie: have the words ‘Tax Invoice’ written
              on it) or a Recipient Created Tax Invoice (RCTI) if it was issued by the recipient;
         (b) the Department’s name (seller identity) unless it is a RCTI;
         (c) the Department’s ABN;
         (d) the date the tax invoice was issued;
         (e) the buyer’s identify or ABN (for supplies of $1000 or more);
         (f) a brief description of the items sold, including the quantity (if applicable) and the price of
              what is sold;
         (g) the GST amount (if any) payable in relation to the sale (this can be shown separately, or,
              if the GST to be paid is exactly one-eleventh of the total price, a statement such as ‘The
              total price includes GST’; and
         (h) for supplies of $1000 or more, the extent that each sale to which the document relates is
              a taxable sale.

1.3.     Invoices from suppliers
1.3.1.   Specific arrangements stipulated in individual agreements that the Department enters into
         may require additional information to be included in any tax invoice issued by a supplier. Staff
         members should ensure that such arrangements are complied with before issuing a tax
         invoice.
1.3.2.   For documents issued by a supplier, if the document does not contain all the required
         information, staff members may treat that document as a valid tax invoice if the missing
         information can be clearly identified from other documents provided by the supplier. The



                                                    140
         document must make clear that it was intended to be a tax invoice or recipient created tax
         invoice. This must be satisfied by reference to the document itself. Other documents relating
         to the intentions of the supplier are irrelevant. This requirement may be satisfied by including
         the words 'Tax Invoice' or 'GST Invoice' or 'Recipient Created Tax Invoice', 'Tax Invoice
         Issued by the Recipient' or 'Recipient Created GST Invoice' in the heading of the document.
         A statement in the body of the document could also make it clear.
1.3.3.   Under PAYG Withholding provisions, for invoices or payments exceeding $82.50 (including
         GST), if there is no ABN on the supplier's invoice or other document relating to the
         transaction - such as a quote or order form – the Department must withhold an amount equal
         to the top marginal tax rate plus the Medicare levy (currently at 46.5%) of the payment.
         Exceptions to this rule (where the Department can request a written statement from the
         supplier, such as the Australian Taxation Office’s (ATO) ‘Statement by a Supplier’) include:
         (a)      the payer is not making the payment in the course of carrying on an enterprise in
                  Australia.
         (b)      the payment is $75 or less, excluding any GST.
         (c)      the supply that the payment relates to is wholly input-taxed.
         (d)      the supplier is an individual and has given you a written statement which says:
                   (i) the supply relates to a private recreational pursuit or hobby; or
                   (ii) the supply is wholly of a private or domestic nature for that supplier.
         (e)      the supplier is an individual aged under 18 years and the payment does not exceed
                  $120 a week.
         (f)      the supply is made by an individual or partnership without a reasonable expectation of
                  profit or gain.
         (g)      the supplier is not entitled to an ABN as they are not carrying on a business or
                  enterprise in Australia, or
         (h)      the whole of the payment is exempt income for the supplier.
1.3.4.   When the remaining 53.5% is paid to the supplier, the Department should provide the supplier
         with an original and copy of a payment summary for their tax return. The Department will pay
         the 46.5% withheld to the ATO as part of its monthly BAS reporting.

1.4.     GST credits
1.4.1.   The Department can claim GST credits for GST included purchases made if:
         (a)      the purchase was intended to be used solely or partly in carrying on departmental
                  business;
         (b)      the price includes GST;
         (c)      the department provided, or is liable to provide, payment for the item purchased; and
         (d)      the department has a tax invoice from the supplier.
1.4.2.   The Department cannot claim any GST input tax credits for payments where 46.5% were
         withheld if GST was included in the price. Therefore, a separate payment record should be
         used to keep such transactions.
1.4.3.   Whenever the Department makes GST-free supplies, including exports, it must claim full
         credits on inputs (acquisitions) relating to the making of those supplies and must not have a
         GST liability on those associated outputs.
1.4.4.   The Department cannot claim a GST credit for a purchase that is intended to be used for
         making input taxed supplies, or private or domestic purposes.
1.4.5.   Where the Department acquires goods or services over the incidental limit of $75 from a non-
         registered provider (with no GST is included in the purchase price), it must not claim input tax
         credits on that purchase.
1.4.6.   Staff members should keep documents showing proof of purchases (for example, cash
         register dockets and receipts) to claim GST credits for purchases that cost $82.50 (including
         GST) or less with no tax invoice. At a minimum, staff members should seek documentation
         that:



                                                   141
         (a)      sets out the name and address of the seller;
         (b)      describes the type and quantity of the goods; and
         (c)      sets out the date and cost of the purchase.
1.4.7.   The Department should keep all tax invoices received (or RCTI provided) to claim the correct
         amount of GST credits for those purchases. Where the purchase was intended for use partly
         in carrying on the Department’s business, the Department can only claim that portion of the
         GST that relates to the business use of the purchase.
1.4.8.   To claim GST credits, the Department must have GST records (such as tax invoices) that
         record its purchase of goods or services and comply with the GST laws, GST records must be
         kept for a minimum of five years.
1.4.9.   To claim GST credits for taxable imports, the Department must keep all documents from the
         Australian Customs and Border Protection Service showing the amount of GST paid on those
         imports.

1.5.     Administrative requirements
1.5.1.   At the end of each month, the Department (through the Treasury, Taxation and Assets
         Management Team, Financial Operations Branch) is to complete and lodge its BAS and pay
         any net tax due (or claim any credit).

2.       Fringe Benefits Tax (FBT)
2.1.1.   A fringe benefit is a benefit provided to an employee or an associate of an employee, in
         respect of the employee's employment by:
         (a)      the employee’s employer;
         (b)      an associate of the employer; or
         (c)      a third party under an arrangement with the employer or an associate of the
                  employer.
2.1.2.   In broad terms, a fringe benefit is any payment of benefit made to an employee other than
         salary, wages and superannuation.
2.1.3.   FBT is paid by the Department in respect of fringe benefits provided to a staff member
         resulting from their employment in the Department. FBT extends to benefits that are provided
         to former or prospective staff members in connection with their past or prospective
         employment with the Department.
2.1.4.   The FBT year runs from 1 April to 31 March. The Department is required to lodge an annual
         return by 21 May (or the first business day after) for any fringe benefits it provided during the
         FBT year. In addition, the Department must pay FBT instalments throughout the year. These
         instalments are recorded and paid as part of the Business Activity Statement, at the times set
         out below:

          FBT Instalment                  Quarterly GST Payers             Monthly GST Payers
           st
          1 instalment                    28 July                          21 July
           nd
          2 instalment                    28 October                       21 October
           rd
          3 instalment                    28 February                      21 February
           th
          4 instalment                    28 April                         21 April

2.1.5.   The final balance owing (if any) on the FBT Annual Return must be paid when the Annual
         Return is lodged, on or before 21 May.
2.1.6.   The Department must make elections and declarations, and obtain all declarations of staff
         members, no later than the day its FBT return is due to be lodged with the ATO or, if the
         Department does not have to lodge a return, by 21 May. There is no need to notify the ATO
         of any election or declaration as business records are sufficient evidence.




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2.2.     General
2.2.1.   Two FBT returns are to be completed by the Department at the end of each FBT year. These
         returns are for:
         (a) departmental employees (completed by the Treasury, Taxation and Assets Management
             Team, Financial Operations Branch); and
         (b) entitlements for Senators and Members of Parliament (completed by Ministerial and
             Parliamentary Services Division).

2.3.     Procedural
2.3.1.   This FBT guidance does not apply to current or former Parliamentarians/office holders or staff
         employed under the Members of Parliament (Staff) Act 1994. All queries relating to these
         categories should be referred to the Ministerial and Parliamentary Services Division, Asset
         Management and Parliamentary Services Group.
2.3.2.   When a benefit is proposed to be provided to a staff member, the relevant approver is to
         consider whether the benefit is subject to FBT requirements.
2.3.3.   In determining whether a right, privilege, service or facility received by a staff member is a
         benefit within the terms of the Fringe Benefits Tax Assessment Act 1986 (FBTA Act), staff
         members are to consider any advice issued by the ATO and any legislative provision which
         states exempt items, or contact the Treasury, Taxation and Asset Management Team,
         Financial Operations Branch.
2.3.4.   If provided to a staff member, the staff member is to be notified that the benefit is subject to
         FBT. It is the responsibility of the staff member provided with the benefit to seek their own
         independent advice on how this may affect them for taxation purposes etc.
2.3.5.   Benefits provided to staff members which are subject to FBT must be recorded on the
         Department’s financial management information system by the Chief Financial Officer
         Division and allocated against the appropriate entry.
2.3.6.   The Department must maintain a record of all fringe benefits provided to employees and must
         retain those records for a period of five years, beyond the annual reporting period. In
         particular, the following details are to be kept:
         (a)      records which explain transactions and acts relevant for the purpose of ascertaining
                  the Department’s liability under the FBTA Act;
         (b)      the taxable value of each fringe benefit provided to each employee (its value before it
                  is grossed up). Records which may be relevant are invoices, receipts, travel diaries,
                  log books, odometer records and employee declarations;
         (c)      fully referenced working paper file to support the FBT return;
         (d)      the method of allocating the taxable value of a fringe benefit provided to two or more
                  staff members; and
         (e)      that 100% of the taxable value of the benefits has been allocated to staff members
                  where required.
2.3.7.   Where a staff member receives a benefit from the Department that is subject to the FBT, they
         are required to maintain any necessary or relevant information requested.
2.3.8.   In accordance with the timeframes (quarterly and yearly) indicated in the CEI and FBTA Act,
         the Treasury, Taxation and Assets Management Team, Financial Operations Branch shall
         undertake the requirements to ensure that the Department pays FBT to the ATO.

2.4.     Payment summaries
2.4.1.   The Department is to report the grossed-up value (Reportable Fringe Benefits Amount) of all
         fringe benefits provided to each employee over the twelve months of the FBT year, if the total
         taxable value (that is, the pre grossed-up amount) of an individual employee's fringe benefits
         exceeds $2,000. The Treasury, Taxation and Assets Management Team, Financial
         Operations Branch is to consult with HR Services Branch to ensure that the Department
         meets these requirements.



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2.4.2.   Fringe benefits that are exempt from FBT are excluded from the calculation of reportable
         fringe benefits. In addition, the following fringe benefits are excluded from reporting
         requirements:
         (a)      car parking benefits (other than car parking expense payment benefits);
         (b)      entertainment by way of food and drink, and benefits associated with that
                  entertainment (such as travel and accommodation);
         (c)      hiring or leasing entertainment facilities, such as corporate boxes;
         (d)      benefits provided to staff members in remote areas that receive concessional
                  treatment; and
         (e)      car benefits arising from a staff member’s private use of pooled or shared cars.
2.4.3.   Even though a reportable fringe benefit amount is included on a staff member’s payment
         summary, it is not to be included in the staff member’s assessable income. It is, however,
         included in a number of income tests relating to the following government benefits and
         obligations:
         (a)      Medicare levy surcharge;
         (b)      mature age worker tax offset;
         (c)      deduction for personal superannuation contributions;
         (d)      tax offset for eligible spouse superannuation contributions;
         (e)      super co-contribution;
         (f)      higher Education Loan Programme (HELP) and Financial Supplement repayments;
         (g)      child support obligations;
         (h)      entitlement to certain income-tested government benefits.

2.5.     Administrative requirements
2.5.1.   In calculating any FBT amount, staff members are to apply any applicable legislative,
         administrative or similar guidance on the subject. This includes any information provided by
         the ATO and guidance produced in the Department.

3.       Controls
3.1.1.   The key controls and recognition of GST/FBT is closely scrutinised by the Treasury, Taxation
         and Asset Management Team and the M&PS Specialist Financial Advice Team, and by
         external reviewers of the annual FBT return.




                                                  144
4.     Reference topics
4.1.   Key references

        Source                                FBT                              GST
        Legislation           Financial Management and          A New Tax System (Goods
                               Accountability Act                 and Services Tax) Act 1999
                               1997Fringe Benefits Tax           Finance Minister's (A New Tax
                               Assessment Act 1986Fringe          System) Directions 2005
                               Benefits Tax Act, 1986            Financial Management and
                              Fringe Benefits Tax                Accountability Act 1997
                               (Application to the
                               Commonwealth) Act 1986
                              Fringe Benefits Tax
                               Regulations 1992
                              Fringe Benefits Tax
                               (Application to the
                               Commonwealth) Regulations
        CEIs/OGs              2.3 - Official Travel             2 - Committing to Spend Public
                              2.4 – Official Hospitality         Money
        Forms                 Travel Diary                      Nil
        Other                 Intranet page – FBT &             Nil
                               Entertainment
                              Intranet page – FBT & Travel
                               Guide

4.2.   Key contacts

        Branch                 Contact for Assistance on:
        Legal Services        Terms of agreement or arrangement with suppliers.
        Branch
        Taxation,             The Department’s taxation obligations.
        Treasury and
        Asset
        Management
        Team, Financial
        Operations
        Branch
        M&PS Specialist       FBT for Parliamentarians, former Office holders, former
        Financial Advice       Parliamentarians or staff employed under the Members of
        Team                   Parliament (Staff) Act 1994.
        Accounts              Payment of account and tax invoice requirements.
        Processing Unit,
        Financial
        Operations
        Branch
        Procurement           This CEI and Operational Guideline.
        Assistance and        Internal delegations issues.
        Financial Policy
        Team, Financial
        Services Branch




                                             145
CEI/OG 7 - MANAGING PUBLIC MONEY
INTRODUCTION


 About this CEI

 This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction to
 staff members on the proper management of public money. This includes:

        receiving public money;
        banking;
        loss and recovery of public money;
        cash advances;
        investments and borrowings;
        special public money;
        special accounts; and
        fees and charges.

 What is public money?

 Section 5 of the FMA Act defines public money as money in the custody or under the control of the
 Commonwealth or any person acting for or on behalf of the Commonwealth in respect of the custody
 and control of the money. This includes money that is held on behalf of someone else, such as trust
 money.

 Public money includes Australian currency, foreign currency and cheques in any currency. Public
 money is raised by, or on behalf of, the Commonwealth in a variety of ways, including taxes,
 borrowings, loan repayments, rebates, levies and fees. Money held on trust by the Commonwealth
 and money found on Commonwealth premises is also public money.

 The FMA Act and Regulations apply to all money held or controlled by FMA Act agencies,
 irrespective of whether the money is provided through the Federal Budget, a special appropriation or
 raised by the agency, such as through cost recovery.

 Receipt and custody of public money by outsiders

 In certain circumstances, agencies may enter into arrangements that allow a person outside the
 Commonwealth to handle public money (see CEI - Handling of Public Money by Persons Outside of
 the Commonwealth).
                                                                       Whole of Government Model CEI Provision




Instances of Non Compliance

All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).




                                                 146
RECEIVING PUBLIC MONEY - CHIEF EXECUTIVE INSTRUCTION 7.1 (V1 - 07/2012)

1.       General

          INSTRUCTIONS – all staff



                If you receive public money, you must ensure that the money is banked no later
                 than:
                       - the next banking day; or
                       - a banking day approved by your Chief Executive (or their delegate).
                You must ensure that public money is only ever deposited into an official account.
                If you receive public money in a non-bankable currency, you must take reasonable
                 steps to safeguard the money.
                If you are entering into an agreement or arrangement with a person outside the
                 Commonwealth for the receipt, custody or payment of public money, you must
                 comply with the instructions in CEI – Handling of Money by non-Commonwealth
                 Officials.
                If you receive special public money, you must handle it in accordance with the
                 instructions on “Special Public Money” in this CEI.
                                                                        Whole of Government Model CEI Provision


1.1.1.   Where the receipt of money would not be in the interests of the Commonwealth, you should
         decline to receive the money, record and report the event to the Chief Financial Officer
         promptly.

2.       Delegations and directions
2.1.1.   While there is no FMA delegation for the receipt of public money, the following applies.

          Position                  Responsibilities
          Receivers of Public         Where required, issue receipts for all cash (coin and notes)
          Money – Accounts              received.
          Processing Unit,            Issue reference numbers for all payments received by credit
          Financial Operations          card.
          Branch                      Prompt banking of moneys received.
                                      Maintain complete records for all receipts/deposits into the
                                        official bank accounts.
          Staff members               Ensure the service provider:
          managing                     - banks public money promptly and
          arrangements with            - maintains complete records for all receipts/deposits.
          persons outside the
          Commonwealth
          Chief Financial Officer       Ensure the proper control, recording and reporting of receipts
                                         and deposits.




                                                  147
RECEIVING PUBLIC MONEY - OPERATIONAL GUIDELINE 7.1

1.       General
1.1.1.   The receipt of public money may occur through a variety of forms such as cash, cheques,
         coins or direct credit.
1.1.2.   A staff member is considered to have nominal custody of public money if they:
         (a)    hold the money by way of a petty cash advance or other advance;
         (b)    have received, and hold, money on behalf of the Department.
1.1.3.   Money received from an estate is to be treated as Other Administered Receipts.
1.1.4.   Non-bankable currency is to be treated as Public Property (10.3 – Custody and Use of Public
         Property).

2.       Process guide
2.1.     Identification
2.1.1.   Detail should be obtained so as to identify who paid the money received and for what
         purpose. If sufficient detail is not known, the staff member is to make reasonable enquiries to
         clarify this.

2.2.     Receiving money
2.2.1.   Money received should be banked on the same day, where possible, or on the next business
         day. Where the value of takings is low, banking may be done weekly, so long as the money is
         held securely.
2.2.2.   When money (including cheques) is received by the mail, the details are to be recorded in the
         Mail Remittance Register (contact: Accounts Processing Unit, Financial Operations Branch).
         Cheques are to be reviewed to ensure that they are crossed ‘not negotiable’.
2.2.3.   Payments can received by credit/debit card through the Department’s Merchant Agreement.
         In such instances:
         (a)    The Accounts Processing Unit is to enter the card details and amount through the
                business link unit and ensure it is approved; and
         (b)    the merchant tapes are to be checked by the Accounts Processing Unit to ensure that
                the transactions reconcile (part of the terminal settlement process).
2.2.4.   Where money is received by direct deposit, the Bank registers the payment and this is
         reflected on the daily bank statement received by the Treasury, Taxation and Asset
         Management Team, Financial Operations Branch.
2.2.5.   Where money is received in a foreign currency, the transaction is to be processed as soon as
         possible. Where the currency cannot be exchanged into Australian dollars or banked, the
         amount is to be managed as public property (see 10.3 – Custody and Use of Public Property).

2.3.     Money found on Departmental premises
2.3.1.   Money found on departmental premises and other unidentified receipts are, and should be
         accounted for as, administered receipts (refer to section 38.57P of the Finance Minister’s
         Orders). These receipts should not be treated as assets held in trust.
2.3.2.   Where the owner is not located within one day of funds are found, staff members (this may be
         through Reception staff) should hand the money to the Accounts Processing Unit, Financial
         Operations Branch.

2.4.     Post-dated and dishonoured cheques
2.4.1.   The acceptance of a cheque is conditional upon it being honoured.
2.4.2.   Post-dated cheques must not be receipted until the date on the cheque is reached. Until such
         a time, the cheque must be secured and recorded in the Post-date Cheques Register.



                                                  148
2.4.3.   Where a cheque is dishonoured, the drawer of the cheque is to be contacted to have the
         cheque replaced or the deficiency covered by another alternative payment solution. The debt
         remains and recovery action should continue if needed. The Treasury, Taxation and Asset
         Management Team receive and act on notices of dishonour.

2.5.     Processing and receipts
2.5.1.   The relevant area is to validate the debtor details for money received against invoiced
         amounts and enter the information into the Business Group deposit book/bank account and
         the FMIS. Once the money is banked, it can be allocated against the debtor.
2.5.2.   A receipt is only issued when requested. Where the Australian value of a foreign currency
         deposit is known from the daily bank statement, the receipt should be issued for that amount.
2.5.3.   Receipts that have been incorrectly completed or damaged are to be cancelled and retained
         in numerical sequence. Where a manual receipt has been issued, the receipt can be
         cancelled by ruling through the receipt (in ink) and making the receipt ‘cancelled’.
2.5.4.   If a duplicate receipt is required, a copy of the original can be provided. At no time should a
         second (or subsequent) official receipt be issued.

5.       Controls
5.1.1.   The key controls are (also refer to CEI 9 – Managing Debt):
          (a) fortnightly reconciliations of accounts; and
          (b) internal and external audits.

6.       Reference topics
6.1.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997

          Finance                 2008/07 – Relevant Agency Receipts – FMA Regulations 15 and
          Circulars                16
          CEIs/Operational        7.2 – Banking
          Guidelines              7.4 – Cash Advances (including petty cash and cash floats)
          Forms                   Accounts receivable forms

6.2.     Key contact
          Branch               Contact for Advice on
          Accounts              Receiving and processing money.
          Processing Unit,      Processing credit/debit card payments.
          Financial
          Operations
          Branch
          Treasury, Tax and       Banking, direct deposits, dishonoured cheques.
          Asset                   Receiving money and the management of such funds.
          Management
          Team, Financial
          Operations
          Branch
          Procurement             This CEI and Operational Guideline.
          Assistance and          Internal Delegation issues.
          Financial Policy
          Team, Financial
          Services Branch




                                                   149
BANKING – CHIEF EXECUTIVE INSTRUCTION 7.2 (V1 - 07/2012)

1.       Banking
1.1.     General
1.1.1.   Each official bank account established by the Department is to be used only for the purpose
         for which it was established.

          Section 8 of the FMA Act provides the Finance Minister with the power to enter into an
          agreement with a bank for the receipt, custody, payment or transmission of public money.
          Section 9 of the FMA Act allows the Finance Minister to open and maintain official bank
          accounts.

          The power to enter into transactional banking agreements and to open and maintain official
          bank accounts in Australia has been delegated to all agency Chief Executives with
          directions. Some Chief Executives also have the power to enter into agreements relating to
          bank accounts outside of Australia.

          INSTRUCTIONS – all staff



                 You must not deposit public money into any account other than an official account.
                 You must not open, maintain or close a bank account, unless delegated the
                  authority to do so under section 9 of the FMA Act.
                 You must not enter into an agreement with a bank for transactional banking
                  services, unless you have been delegated the authority to do so under section 8 of
                  the FMA Act.

          Agreements with Banks

          INSTRUCTIONS – Staff with a delegation to enter into agreements with banks



                 You may only enter into an agreement with a bank for transactional banking
                  services in Australia.
                 When entering into an agreement with a bank, you must comply with:
                       - the directions in the delegation from the Finance Minister or any directions in
                          the delegation from your Chief Executive; and
                       - the requirements of FMA Regulations 7-12 (see CEI – Committing to Spend
                          Public Money).
                 You may only enter into an agreement with a bank for overdraft drawings if the
                  agreement provides for each drawing to be repaid within 30 days.
                 You must not enter into an agreement with a bank for a period of more than one year,
                  unless the agreement can be terminated by the agency at any time after giving notice
                  of six months or less.



          Managing Bank Accounts

          INSTRUCTIONS – Staff with a delegation to open and maintain bank accounts



                 You may only open and maintain official bank accounts in Australia.


                                                  150
                 When opening and maintaining an official bank account, you must:
                     - ensure that the name of the account includes the word “Official”; and
                     - comply with the directions in the delegation from the Finance Minister or any
                       directions in the delegation from your Chief Executive.
                                                                             Whole of Government Model CEI Provision


2.       Delegations and directions
2.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

                   Arrangements                             Source (including list of delegates)
          Under section 8 of the FMA Act, to enter          Financial Management and Accountability
          into agreements with any bank for the             (Finance Minister to Finance Secretary)
          receipt, custody, payment or transmission         Delegation Instrument
          of public money or for other matters
          relating to the conduct of the                    Internal Financial Delegations Instrument
          Commonwealth’s banking business.

          Limits apply (refer to the delegations
          instrument)
          Under section 9 of the FMA Act, to open           Financial Management and Accountability
          or maintain bank accounts in accordance           (Finance Minister to Finance Secretary)
          with FMA section 8.                               Delegation Instrument

          Limits apply (refer to the delegations            Internal Financial Delegations Instrument
          instrument)

2.1.2.   The following responsibilities also apply:

          Position              Responsibility
          Bank account           Undertake monthly reconciliations and ensure appropriate records
          operators                are retained.
          Chief Financial        Ensure that the control environment and FMIS is appropriate to
          Officer                  manage bank accounts and reconciliations are performed at least
                                   monthly.
                                 Select a preferred banker and enter into arrangements to provide
                                   all necessary banking services (other than public share offers).
                                 On a regular basis, ensure the need for any special bank accounts
                                   is reviewed.
          Deputy Secretary,      Manage the Official Public Account maintained with the Reserve
          Financial                Bank of Australia.
          Management
          Group




                                                      151
BANKING – OPERATIONAL GUIDELINE 7.2

1.       Official bank accounts
1.1.1.   Staff members should follow the specific directions in the delegations instruments (regarding
         FMA section 8 and 9) and the Agency Banking Framework Guidance Manual when dealing
         with official bank accounts.
1.1.2.        Accounts are to be non-interest bearing accounts. Dependent upon the banking
         agreement, accounts may be subject to overdraft interest penalties on any debit balances.
1.1.3.        Staff members must ensure that any payment to be made from an official bank account
         has been properly authorised prior to the payment occurring.

2.       Process guide (non Whole of Australian Government)
2.1.     Selecting a transactional banker
2.1.1.   In entering into an arrangement with a bank, staff members should ensure the terms and
         conditions of the agreement meet Commonwealth policies (refer to the Commonwealth
         Procurement Rules, the Agency Banking Framework Guidance Manual and the delegations
         instruments).
2.1.2.   For the purposes of approving a spending proposal under FMA regulation 9 to enter into an
         arrangement with a bank, all relevant costs should be included in the documentation provided
         to the delegate. This includes merchant fees and charges.

2.2.     Opening Official bank accounts
2.2.1.   Official bank accounts should only be open for the conduct of departmental and/or
         administered activities.
2.2.2.   Staff members are to submit a minute to the Chief Financial Officer outlining the following:
         (a) proposed use(s) of official bank account;
         (b) the reason(s) why a new official bank account is required;
         (c) the proposed name of the official bank account (in accordance with the delegations
              instruments Directions);
         (d) the nature of the funds to be managed through the account (departmental, administered,
              special etc);
         (e) account arrangements (ie: penalties or bank fees); and
         (f) any bank documentation (ie: Bank account application form and signatories) required to
              be completed.
2.2.3.   Following approval, the following items should be submitted to the bank:
         (a) completed forms; and
         (b) any instructions to the bank on account management.
2.2.4.   Once confirmed, the Chief Financial Officer (through the Treasury, Taxation and Asset
         Management Team, Financial Operations Branch should advise the Reserve Bank of
         Australia of the establishment of the account.

2.3.     Register of Official bank accounts
2.3.1.   A Register of Official Bank Accounts is to be maintained by the Treasury, Taxation and Asset
         Management Team, Financial Operations Branch. The Register is to be reviewed half yearly
         or when an official bank account is altered.

2.4.     Cheque signatories
2.4.1.   The Chief Financial Officer has the power to appoint cheque signatories (FMA sections 8 and
         9) to accounts.




                                                  152
2.4.2.   Two independent signatories are required for all official bank accounts. At no time is a
         cheque signatory to pre-sign cheques.
2.4.3.   Staff members appointed as signatories are required to undertake the standard identification
         checks required of the bank providing the account.

2.5.     Use of Official bank accounts
2.5.1.   Use of funds from an official bank account is only to be undertaken by staff members with the
         authority to do so (such as a drawing right as discussed in CEI 6.1 – Drawing rights) following
         confirmation that there is approval for the proposed payments.

2.6.     Issuing cheques
2.6.1.   The safe custody of all cheques must be observed and users (ie: signatory) must ensure that:
         (a) the correct amount is indicated on the cheque;
         (b) the cheque is made in favour of the payee indicated on the Accounts Payable form;
         (c) the cheque is marked ‘not negotiable’;
         (d) no blank space is left on the cheque so as to permit any fraudulent amendment of the
               cheque;
         (e) the cheque is clear and legible; and
         (f) the payee is notified of the purpose and details of the payment.
2.6.2.   All cheques should be sent promptly and to the correct party. In instances where a cheque is
         to be hand delivered or collected, it should only be given to the payee or agent upon
         appropriate identification and (for agents), signed authority.
2.6.3.   If a cheque has been raised in error, a ‘Stop Cheque Request’ is to be submitted and the
         payment in the FMIS cancelled.
2.6.4.   Where a replacement cheque is requested, a ‘Stop Cheque Request’ is to be submitted for
         the original cheque if the bank advises it has not been presented. Upon confirmation from the
         bank that the Request has been processed, the payment allocation in FMIS can be cancelled
         and a replacement cheque drawn.
2.6.5.   Where it is suspected that a cheque has been fraudulently endorsed and negotiated, the
         Office of Chief Audit Executive and the bank are to be notified.
2.6.6.   Where a cheque is returned, the address of the payee should be checked. Where the payee
         cannot be located within a period of five working days, a ‘Stop Cheque Request’ is to be
         placed on the cheque and the amount is to be credited to the account code from which the
         money was originally drawn. The repayment of an unclaimed cheque should be noted in the
         department’s cashbook and a notation entered on the relevant Accounts Payable Form.
2.6.7.   In instances where a cheque has a production error, the cheque is to be taken out of
         circulation. In doing so:
         (a) the cheque must have the word ‘cancelled’ inscribed across it;
         (b) the cancelled cheque must be filed in the ‘Cancelled Cheque Register’;
         (c) where a replacement cheque is issued, it is to be denoted as a replacement to the
               original cheque; and
         (d) cancelled cheques must be retained for fifteen (15) months before being destroyed.

2.7.     Maintenance of Official bank accounts
2.7.1.   Official bank accounts should be reviewed regularly to ensure proper management of the
         funds has occurred. Such reviews should include:
         (a) account sweeping;
         (b) monthly reconciliation; and
         (c) usage.
2.7.2.   Procedural aspects of the accounts should be managed in accordance with the Directions in
         the delegations instruments.




                                                  153
2.8.     Reconciliation of bank accounts
2.8.1.   Bank reconciliations are to be completed on a monthly basis so as to balance the final cash
         balance of the ledger account to the bank statement balance. Listings must be prepared for:
         (a) unpresented cheques;
         (b) deposits outstanding; and
         (c) direct deposits and bank fees not posted.
2.8.2.   Each bank reconciliation should be performed monthly and reviewed by the Director or
         Assistant Director, Treasury, Taxation and Asset Management Team, Financial Operations
         Branch.
2.8.3.   The Chief Financial Officer must be notified immediately, in writing, of any discrepancies or
         unreconciled amounts that relate to the bank reconciliation.
2.8.4.   A ‘Statement of Handover’ must be performed whenever a staff member is either permanently
         or temporarily moved from the responsibility for the operation of the account.

2.9.     Closing a bank account
2.9.1.   Regular reviews of official bank accounts should be conducted to ensure that Commonwealth
         resources are being used efficiently and in accordance with any policies and contracted
         conditions.
2.9.2.   Consideration should be given to closing inactive or low-volume accounts where, following
         consultation, it is confirmed that there are alternative accounts that can be used or the
         account is unlikely to be required in the future.
2.9.3.   To close an account, a minute should be provided to the delegate (Chief Financial Officer)
         outlining the case for closure.
2.9.4.   The Treasury, Taxation and Asset Management Team, Financial Operations Branch is also
         required to:
         (a) advise users of the impending closure of the official bank account and the new banking
               arrangements being put in place (if any);
         (b) cease the issuing of cheques on the account and allow sufficient time for unpresented
               cheques to be presented;
         (c) calculate the level of funds required to cover all unpresented cheques and transfer an
               appropriate level of surplus funds to another account;
         (d) at the nominated date, stop payment on any remaining outstanding cheques, close the
               account and withdraw any residual remaining funds;
         (e) where a client subsequently requests payment for a cheque that has been stopped, a
               cheque is to be re-issued from an appropriate bank account; and
         (f) contact the bank to formally close the account and sign any documentation.

2.10. Special Accounts as ledger accounts
2.10.1. Special accounts are ledger accounts. Bank accounts are not necessarily required for a
        special account. The purpose and function of the special account should be reviewed to
        determine if a bank account may be required. If so the standard process for opening bank
        accounts should be employed, noting the requirements of the special account Determination.

3.       Controls
3.1.1.   The key controls are:
         (a) limited delegations and certificate of compliance reporting;
         (b) documentation requirements, including a Register of Official Bank Accounts;
         (c) separation of duties;
         (d) monthly reconciliations; and
         (e) internal and external audits.




                                                 154
4.     Reference topics
4.1.   Key references

       Legislation            Financial Management and Accountability Act 1997
                              Financial Management and Accountability Regulations 1997
                              Criminal Code Act 1995

                              Public Service Act 1999

                              Privacy Act 1988
       Finance                2008/07 - Relevant Agency Receipts - FMA Regulations 15 and 16
       Circulars
       CEIs/Operational       6.1 – Drawing Rights
       Guidelines             7.1 - Receiving Public Money
       Templates/Forms        Nil
       Other                  Agency Banking Framework Guidance Manual

4.2.   Key contacts

       Branch              Contact for Advice on
       Procurement          This CEI and Operational Guideline.
       Assistance and       Internal Delegation issues.
       Financial Policy
       Team, Financial
       Services Branch
       Accounts               Issuing of cheques.
       Processing Unit,
       Financial
       Operations
       Branch
       Treasury, Tax and      Management of bank accounts and drawing rights.
       Asset
       Management
       Team, Financial
       Operations
       Branch




                                             155
LOSS AND RECOVERY OF PUBLIC MONEY - CHIEF EXECUTIVE INSTRUCTION 7.3
(V1 - 07/2012)

1.       General

          All staff members must ensure the proper use and security of any public money they
          receive or have custody of. Section 15 of the FMA Act sets out who is responsible for the
          loss of public money.

          A loss of public money may result in a debt owed to the Commonwealth. A person’s liability
          to pay such a debt is not avoided just because they stop working for the agency. For further
          information on the management of debt, see CEI - Managing Debt.

          INSTRUCTIONS – all staff



                You must not misuse or improperly dispose of public money.
                You are responsible for the security of any public money you receive, or have custody
                 of, and must take reasonable steps to safeguard the money from loss.
                If a loss of public money occurs whilst the money is in your nominal custody, you will
                 be liable to pay the Commonwealth an amount equal to the loss, unless you took
                 reasonable steps to prevent the loss.
                If you cause or contribute to a loss of public money by misconduct, or a deliberate or
                 serious disregard for reasonable standards of care, you will be liable to pay the
                 Commonwealth an amount that reflects your share of the responsibility for the loss.
                                                                             Whole of Government Model CEI Provision


1.1.1.   Where the loss of public money is legally recoverable, any associated debt must be pursued,
         in accordance with section 47 of the FMA Act.
1.1.2.   When you become aware of the loss of money it is to be reported as soon as practicable to
         your supervisor and the Office of Chief Audit Executive (OCAE) for appropriate action.

2.       Delegations and directions
2.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

          Arrangements                                      Source (including list of delegates)
          Under section 47 of the FMA Act, to               Financial Management and Accountability
          pursue recovery of a debt for which the           (Finance Minister to Finance Secretary)
          Chief Executive is responsible or to              Delegation Instrument
          decide not to pursue recovery.
                                                            Internal Financial Delegations Instrument
          Limits apply. (refer to the delegation
          instruments)

2.1.2.   The following responsibilities also apply:

          Position           Responsibilities
          All staff           Report losses to OCAE.
          Deputy              Ensure recovery is pursued and report losses to the OCAE for
          Secretary/             investigate.
          Social Club         Notify the staff member (s) involved that they
          President             -     may be liable to pay an amount equal to the loss; and



                                                      156
Position          Responsibilities
                     -       should provide a report detailing their actions and claims.
                   Implement any actions against staff members found to be negligent.
Office of Chief          Initiate and investigate reports of losses (in consultation with
Audit Executive       Security if required).
                         If the loss involves a Deputy Secretary, the Social Club President
                      or a possible conflict of interest, consult with the Independent Chair of
                      the Audit Committee and the Secretary.
                         Determine and initiate the appropriate course of action against
                      any staff member found to be negligent.
                         Takes steps to address in defects in the Department’s internal
                      procedures that led or contributed to the loss.
Chief Financial          Pursue the recovery of debts related to the loss of public money.
Officer




                                        157
LOSS AND RECOVERY OF PUBLIC MONEY - OPERATIONAL GUIDELINE 7.3

1.       General
1.1.1.   A staff member is considered to have nominal custody if they:
         (a) hold the money by way of a petty cash advance or other advance; or
         (b) have received, and hold, money on behalf of the Department.
1.1.2.   An amount of money lost is considered to be a debt and it is to be recovered as soon as
         possible (refer CEI 9 – Management of Debt).
1.1.3.   Section 15 of the FMA Act outlines that the value of the loss is to be recovered from the staff
         member who had custody of the money if they had contributed to the loss, by way of
         misconduct or serious disregard of policies and guidelines. Mitigating circumstances are to
         be taken into account when liability for any loss is determined.
1.1.4.   A loss of public money due to fraud or misappropriation is always recoverable in full. Every
         effort must be made to fully recover any funds from the staff member found responsible for
         the loss.
1.1.5.   A staff member’s liability to pay for the loss is not avoided if they stop working for the
         Department.
1.1.6.   Loss of public money by persons outside the Commonwealth should be managed in
         accordance with the terms of their contract and CEI 1.2 – Preventing Fraud.

2.       Process guide
2.1.     Reporting lost public money
2.1.1.   The loss of, or a deficiency in, public money is when there is a physical loss of any cash
         value, including bank notes, coins, unbanked cheques and postage stamps. Loss also
         includes actions such as inappropriate transactions (including misuse) on a Commonwealth
         Credit Card.
2.1.2.   When a staff member becomes aware of the loss of public money, the loss is to be reported
         as soon as practicable to the Office of Chief Audit Executive (OCAE) either directly or through
         their supervisor.

2.2.     Investigating the loss of public money
2.2.1.   The circumstances surrounding all cases where public money has been lost must be
         reviewed and investigated.
2.2.2.   OCAE, in consultation with the Audit Committee, will undertake investigations and appropriate
         responses in accordance with FMA section 15, the Commonwealth Fraud Control Guidelines
         and CEI 1.2 – Preventing Fraud. If insufficient detail has been provided to the
         investigator/delegate, a more detailed report should be requested from the relevant parties.
2.2.3.   Investigations should include the following:
         (a) determining the exact amount of the loss or deficiency in public money;
         (b) determining when and where the event occurred which led to the loss;
         (c) identifying (and documenting) the circumstances under which the loss occurred;
         (d) assessing whether the loss was caused by a mistake, error, default, neglect or fraud by
              any person (regardless of whether or not they are a staff member);
         (e) assess whether there is any evidence of theft, fraud or robbery;
         (f) determine whether the amount lost has been made good by the staff member concerned;
              and
         (g) review the Department’s existing systems of internal controls applicable to the loss so as
              to determine any defects and recommend potential remedies.
2.2.4.   Where an investigation determines that theft, fraud, robbery or any other serious action did
         not occur, OCAE may recommend to a FMA section 47 (non-recovery of debt) delegate that
         the money be deemed non-recoverable (refer to CEI 9.2 – Non-recovery (Write Off) of Debt).



                                                   158
2.3.     Reporting of major incidents
2.3.1.   In circumstances where an investigation identifies that the loss is serious so as to warrant the
         need for police assistance (such as for a search and/or arrest), the matter is to be brought to
         the attention of the Audit Committee and the Secretary before being referred to the Australian
         Federal Police.

2.4.     Decision
2.4.1.   Following their review of all submissions, the delegate (FMA section 47) is to determine
         whether recovery of an amount equal to the value lost is to be sought from the staff member.
2.4.2.   In circumstances where a staff member submits evidence of mitigating circumstances and/or
         preventative action, the delegate may determine that the submission as an acceptable
         defence and that the debt it not recoverable. Such a decision should also consider whether
         the debt would likely to be recoverable at law.
2.4.3.   In circumstances where it is concluded that the staff member with nominal custody of the
         public money did not:
         (a)       take all reasonable steps to care for the money; or
         (b)       has not complied with Departmental procedures in handling the money,
         it shall be determined that the staff member is liable to pay the Commonwealth an amount
         equal to the loss (in accordance with subsection 15(1) of the FMA Act).
2.4.4.   Where it is concluded that that staff member with nominal custody of the public money was
         only partially responsible for the loss, a partial debt recovery/write off may be agreed to.
2.4.5.   In circumstances where the investigation conducted reveals that another staff member (who
         did not have custody of the public money at the time of its loss) caused or contributed to the
         loss by misconduct or a serious/deliberate disregard of reasonable standards of care, the
         delegate should determine a just and equitable share of liability to be attributed to that staff
         member.
2.4.6.   All submissions, decisions, recovery and/or write off actions should all be documented and
         filed.

2.5.     Recovery and/or write off of loss
2.5.1.   Recovery can be made by either a cash payment and/or a withholding of a payment due
         (refer to CEI 9 – Managing Debt).
2.5.2.   A staff member’s liability to pay for the loss is not avoided if they stop working for the
         Commonwealth. Every effort is to be made by the Department to ensure that the amount of
         the loss is recovered.

2.6.     Disciplinary action
2.6.1.   The obligation to recover the loss from the staff member as a civil debt is separate to, and not
         to be subsumed by, any decision to pursue criminal or disciplinary action against the staff
         member. Criminal charges may also be pursued in circumstances where illegal actions
         potentially occurred.
2.6.2.   Following a review of the circumstances surrounding the loss of public money, any staff
         member found to be negligent in their duty (particularly if charged with a criminal office) may
         have disciplinary action taken against them.

3.       Controls
3.1.1.   Refer CEI 1.2 – Preventing Fraud and CEI 9 – Managing Debt.




                                                   159
4.     Reference topics
4.1.   Key references

        Legislation           Financial Management and Accountability Act 1997
                              Financial Management and Accountability Regulations 1997
                              Public Service Act 1999
        Finance Circular      2008/07 - Relevant Agency Receipts - FMA Regulations 15 and 16
        CEIs/Operational      1.2 –Preventing Fraud
        Guidelines            9.1 – Recovery of Debt
                              9.2 – Non Recovery of Debt
        Templates/Forms       Nil.

4.2.   Key contacts

        Branch             Contact for Advice on
        Legal Services      Terms and conditions of arrangement in which a loss of public
        Branch                money has occurred.
                            Terms and conditions on recovery of public money.
        Procurement         This CEI and Operational Guideline.
        Assistance and      Internal Delegation issues.
        Financial Policy
        Team, Financial
        Services Branch




                                             160
CASH ADVANCES - CHIEF EXECUTIVE INSTRUCTION 7.4 (V1 - 07/2012)

1.       General

          A cash advance (including petty cash and a change float) is public money that has been
          withdrawn from an official account and provided to a specific staff member to make
          payments in cash. Cash advances are typically used as change floats or to cover minor
          expenses that cannot conveniently or cost effectively be processed for payment by cheque,
          Electronic Funds Transfer or a Commonwealth credit card

          INSTRUCTIONS – Staff who are authorised to hold cash advances



                 You may receive an amount withdrawn from an official account to establish or
                  replenish a cash advance approved by your Chief Executive (or their delegate).
                 You are responsible for the cash advance and must take reasonable steps to
                  safeguard the money from loss.
                 You must comply with the requirements of FMA Regulations 7-12 when committing to
                  spend public money from a cash advance (see CEI - Committing to Spend Public
                  Money).
                 You must not make a payment from a cash advance, unless you are authorised to
                  do so by a valid drawing right (see CEI - Making Payments of Public Money).
                 You must not make a payment for any purpose other than that for which the cash
                  advance was established.

          INSTRUCTIONS – Staff with a delegation to approve the purpose of a cash advance



                 You may approve the establishment of a cash advance for a specific purpose.
                 You may approve the manner in which a cash advance must be maintained.
                                                                         Whole of Government Model CEI Provision


2.       Delegations and directions
2.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

          Arrangements                                      Delegates and Source
          Under subregulation 19(2) of the FMA              Internal Financial Delegations Instrument
          Regulations, approve the purpose for
          establishing a cash advance and the manner
          in which it is maintained.

          Limits apply (refer to the delegation
          instrument)

2.1.2.   The following responsibilities also apply:

          Position                   Responsibility
          Chief Financial Officer     Approve the amount of petty cash floats or one-off increases of
                                       petty cash advances.
          Treasury, Taxation          Administer petty cash arrangements of the Department.
          and Asset
          Management Team,



                                                      161
Position                 Responsibility
and Accounts
Processing Unit,
Financial Operations
Branch
Petty Cash Advance        Administer petty cash floats in accordance with this CEI and
Holders (including the       Operational Guideline.
Social Club)
                            Keep the petty cash float in a minimum C class container.
                            Maintain comprehensive records of all petty cash transactions.
                            Report any deficiency or shortfall immediately to the
                             Group/Specialist Financial Advisor/Social Club President.




                                       162
CASH ADVANCES - OPERATIONAL GUIDELINE 7.4

1.       About petty cash (advances)
1.1.1.   Petty cash should only be used for the payment of goods where the level of expenditure is
         minor and incidental.
1.1.2.   Petty cash is not a preferred method of payment due to the administration it imposes.
1.1.3.   Petty cash floats do not lapse at the end of the financial year and should be reviewed on a
         regular basis, being decommissioned if no longer required.
1.1.4.   Limited petty cash floats are held in Business Groups (either by Executive Assistants or staff
         members in out-posted areas).
1.1.5.   Cash advances should be kept secure at all times and separate from any other money.
1.1.6.   All staff members who are allocated a float are to ensure they understand their role and the
         requirements for operating it.

2.       Process guide – petty cash
2.1.     Establish a petty cash float
2.1.1.   When seeking to establish a petty cash float, staff members should submit a Petty Cash Float
         Establishment / Increase in Float form to the delegate (Chief Financial Officer) through the
         Accounts Processing Unit, Financial Operations Branch for endorsement.
2.1.2.   The limit for a petty cash float is $500. If a larger float is required, supporting documentation
         must be attached to the request.

2.2.     Petty cash limits and approval (reimbursements/advances)
2.2.1.   Petty cash should only be used to reimburse or provide an advance for approved purchases
         up to $50 GST inclusive ($100 GST inclusive for COMCAR), where it is deemed to be more
         efficient and cost effective than using a credit card or accounts payable.
2.2.2.   A higher petty cash advance up to the limit of the float (commensurate with the nature of the
         activity) may be used by the Social Club to facilitate endorsed social activities or approved on
         a case by case basis for one-off requests by the Chief Financial Officer.
2.2.3.   FMA regulation 9 delegates considering requests for reimbursement or an advance should
         ensure the spending proposal is a proper use of public money (efficient, effective, economical
         and ethical).

2.3.     Proof of purchase
2.3.1.   Staff members must ensure that they obtain a valid tax invoice as proof of purchase. Where a
         tax invoice is not able to be obtained, a receipt for amounts less than $82.50 plus GST is still
         valid for the claiming of GST input tax credit.
2.3.2.   In the absence of a receipt or tax invoice, staff members may provide a signed statement
         providing details of the expenditure (a statutory declaration may be sought if deemed
         appropriate).

2.4.     Receiving an advance
2.4.1.   A Petty Cash Advance Form for the estimated cost of the purchase(s) should be approved by
         an FMA regulation 9 delegate, ensuring sufficient supporting documentation is attached.
2.4.2.   Once the purchase is made, the advance should be promptly acquitted by providing a
         receipt/tax invoice to the Float Holder and returning any surplus funds.

2.5.     Seeking reimbursement
2.5.1.   When seeking reimbursement a staff member should complete the Petty Cash
         Reimbursement Form, obtain FMA regulation 9 delegate approval and attach the relevant
         receipt/tax invoice/other documentation evidencing the purchase.



                                                   163
2.6.     Float holder - claim for reimbursement or an advance
2.6.1.   The Float Holder is required to:
         (a)     check that the details of the advance or receipt/tax invoice are consistent with the
                 amount being claimed;
         (b)     ensure that FMA regulation 9 delegate approval has been given;
         (c)     ensure that, in relation to petty cash advances, they are acquitted and any surplus
                 cash returned promptly;
         (d)     retain the forms/documentation including receipt/tax invoice; and
         (e)     provide the cash (reimbursement/advance) to the claimant.
2.6.2.   Both the Float Holder and the claimant are required to sign the form acknowledging the
         transaction.

3.       Process guide – maintenance of petty cash float
3.1.     Reconciliations of petty cash floats
3.1.1.   A reconciliation of all petty cash floats is required at the end of each month.
3.1.2.   In completing the reconciliation, the float holder must:
         (a)      verify that the Petty Cash reimbursement forms covering payments and the remaining
                  cash held equals that in the Petty Cash Advance Float.
         (b)      certify that the reconciliation is true and correct;
         (c)      ensure that the reconciliation is reviewed and witnessed by an independent
                  supervisor (or in the case of the state offices, their direct supervisor);
         (d)      provide a copy of the reconciliation to the Treasury, Taxation and Accounts Team;
                  and
         (e)      provide written notification to the Group/Specialist Financial Advisor immediately upon
                  becoming aware of any discrepancies or unreconciled amounts.
3.1.3.   In instances where the float holder is to be on leave at the end of a reconciliation quarter, the
         petty cash float should be transferred to another staff member using Petty Cash Transfer of
         Custody Form to enable completion of the quarterly reconciliation.

3.2.     Reimbursing the petty cash holding/encashment authority
3.2.1.   The petty cash float is to be continuously maintained and checked.
3.2.2.   To replenish the float:
         (a)   a reconciliation of the float should be undertaken and a completed Accounts Payable
               form (for all payments made from the float) is to be sent to the Accounts Processing
               Unit, Financial Operations Branch and
         (b)   an Encashment Authority Request form should be forwarded to the Treasury, Tax and
               Asset Management Team, Financial Operations Branch who will provide a cheque that
               the Float Holder can cash to replenish the float.
3.2.3.   The Treasury, Tax and Asset Management Team maintains an Encashment Authority
         Register based on the forms provided.

3.3.     Safeguarding a petty cash float
3.3.1.   The direct supervisor of float holders must ensure that the contents of the float does not
         exceed the operational requirements and are held in a secure location.
3.3.2.   The float holder is to liaise with the departmental Security Team to ensure that a spare set of
         keys and knowledge of any safe combination is known to cover situations where the float
         holder is absent.

3.4.     Register of petty cash floats
3.4.1.   The Treasury, Taxation and Assets Team, Financial Operations Branch, COOG is
         responsible for ensuring that a Petty Cash Float Register is maintained for all advances held,
         including the Ministers offices and the Opposition Leader’s Office.



                                                   164
3.4.2.   The Petty Cash Float Register is to contain the following details for each float:
         (a)    date of approval;
         (b)    advance float level;
         (c)    name of the staff member with custody of the float;
         (d)    the Business Group, Division, Branch and/or Unit to which the float is assigned; and
         (e)    where appropriate, the date the advance was terminated.

3.5.     Transferring custody
3.5.1.   In instances where the custody of a petty cash float is to be transferred a reconciliation and
         the Petty Cash Advance Float Transfer of Custody Form should be completed. The previous
         Advance Holder and the new Advance Holder should both retain a copy of the form.
3.5.2.   The original form should be provided to the Treasury, Tax and Asset Management Team,
         Financial Operations Branch so as to allow the Petty Cash Float Register to be updated.

3.6.     Reconciliation deficiencies
3.6.1.   In the event of a deficiency in the petty cash float, the Group/Specialist Financial Advisor must
         be notified in writing. Such notification must be provided as soon as the deficiency is
         identified so as to allow an investigation to occur.
3.6.2.   Investigations should be undertaken in accordance with CEI 7.4 - Loss and Recovery of
         Public Money.
3.6.3.   Staff members with authority to write off debts (FMA section 47) may decide to write of a once
         detail of the deficiency has been provided and reviewed. Writing off a debt is to be
         considered in circumstances where the amount is not recoverable or where the overall cost of
         recovery action outweighs the sum gained.

3.7.     Termination of petty cash float
3.7.1.   If a petty cash float is no longer required, a reconciliation of the funds should be undertaken
         and sent to the Treasury, Taxation and Asset Management Team, Financial Operations
         Branch, advising of the termination. The balance of funds should then be returned to the
         Accounts Processing Unit, Financial Operations Branch, COOG along with:
         (a)      the Petty Cash Advance Float Termination Form; and
         (b)      a completed Accounts Payable form for any payments made from the advance float.

3.8.     Social Club petty cash arrangements
3.8.1.   Additional guidance on the use of petty cash is provided in the Social Club Procedures
         Manual.

4.       Controls
4.1.1.   The key controls are:
         (a)    all float holders have drawing rights through the internal drawing rights instrument;
         (b)    separation of duties;
         (c)    petty cash floats must be held in a minimum C class container;
         (d)    requirement for FMA regulation 9 approval to make advances or pay reimbursements;
         (e)    limited delegates to approve the establishment of floats; and
         (f)    internal and external audits.

5.       Reference topics
5.1.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997




                                                   165
        Finance                2008/07 - Relevant Agency Receipts - FMA Regulations 15 and 16
        Circulars
        CEIs/Operational       7.3 - Loss and Recovery of Public Money
        Guidelines
        Forms                  Petty Cash Advance Float Reconciliation Form
                               Petty Cash Advance Float Transfer of Custody Form
                               Petty Cash Advance Float Termination Form
                               Petty Cash Reimbursement Form
                               Petty Cash Advance Form
                               Accounts Payable Form
                               Petty Cash Float Establishment / Increase in Float Limit
                               Encashment Authority Request
                               Social Club Petty Cash Event Advance Form
        Other                  Finance Social Club Procedures Manual

5.2.   Key Contacts

        Branch              Contact for Advice on
        Treasury, Tax and    Petty cash administration, including encashment.
        Asset
        Management
        Team, Financial
        Operations
        Branch
        Accounts               Petty cash transactions processing (accounts payable forms).
        Processing Unit,
        Financial
        Operations
        Branch
        M&PS Specialist        Petty cash arrangements for the Leader of the Opposition.
        Financial Advice
        Team
        Procurement            This CEI and Operational Guideline.
        Assistance and         Internal Delegation issues.
        Financial Policy
        Team, Financial
        Services Branch




                                               166
INVESTMENTS AND BORROWINGS - CHIEF EXECUTIVE INSTRUCTION 7.5 (V1 -
07/2012)

1.       General
1.1.1.   You are to ensure that proper records are kept on all investments and borrowing activities and
         report as required.

2.       Investments
          The general principle is that public money managed by FMA Act agencies cannot be
          invested. Section 39 of the FMA Act provides the Finance Minister and Treasurer with the
          power to invest public money. This power has been delegated to only a limited number of
          agencies in relation to specific moneys. The investments authorised under section 39 of the
          FMA Act are limited to a range of conservative investments.

          INSTRUCTIONS – all staff



                 You must not invest public money on behalf of the Commonwealth, unless you
                  have been delegated the authority to do so under section 39 of the FMA Act.


          INSTRUCTIONS – Staff with a delegation to invest public money



                 When investing public money, you must comply with the directions in the delegation
                  from the Finance Minister or any directions in the delegation from your
                  Chief Executive.
                 You must ensure that public money is only invested in authorised investments.
                 You must ensure that the proceeds of an investment debited from a Special
                  Account are, upon realisation, credited to that Special Account.
                 When investing public money from a Special Account, you must ensure that the
                  investment is consistent with the purposes of that Special Account.
                 When investing public money that is trust money, you must ensure that the
                  investment is consistent with the terms of the trust.
                 Prior to an investment maturing, you may authorise the reinvestment of the proceeds,
                  upon maturity, in an authorised investment with the same entity.
                 You must take all reasonable steps to obtain the maximum return available on
                  authorised investments.
                 Prior to making an investment or authorising a reinvestment that involves an amount
                  of $15 million or more, you must provide details of the proposed investment or
                  reinvestment to the Australian Office of Financial Management (AOFM).
                                                                         Whole of Government Model CEI Provision



2.1.1.   Funds held with the Department’s transactional banker are not investments.
2.1.2.   In developing investment proposals for delegate approval, you are to ensure that you liaise
         with the Chief Financial Officer.
2.1.3.   The Chief Financial Officer is to ensure that the control environment (including the FMIS) is
         suitable so as to facilitate the control and reporting investment transactions.




                                                  167
3.       Borrowing
          Borrowing on behalf of the Commonwealth is extremely restricted. Section 38 of the
          FMA Act allows the Finance Minister to enter into a limited range of borrowing agreements.
          The Finance Minister has delegated to all Chief Executives the power to enter into
          borrowing agreements for Commonwealth credit card or credit voucher services only.

          For instructions on borrowing in relation to Commonwealth credit cards and credit vouchers,
          see CEI - Commonwealth Credit Cards and Credit Vouchers.


          INSTRUCTIONS – all staff



                 You must not enter into a borrowing agreement on behalf of the Commonwealth,
                  unless you have been delegated the authority to do so under section 38 of the
                  FMA Act.


          INSTRUCTIONS – Staff with a delegation enter into borrowing agreements for credit
          card services



                 You may only enter into a borrowing agreement for the issue to, and use by, the
                  Commonwealth of credit card or credit voucher.
                 When entering into a borrowing agreement, you must comply with the instructions
                  outlined in the CEI - Commonwealth Credit Cards and Credit Vouchers.
                                                                        Whole of Government Model CEI Provision



3.1.1.   A delegate may enter into an arrangement with a bank for borrowing money from the bank by
         way of an advance to the Commonwealth (including the advance on an overdraft) so long as
         the advance is to be repaid by the Commonwealth within ninety (90) days.
3.1.2.   A delegate may enter into agreements in accordance with the FMA regulations for borrowing
         money from banks or other persons so long as the money is required to be repaid within sixty
         (60) days after the Commonwealth is notified by the lender of the amount borrowed.

4.       Delegations and directions
4.1.1.   You should refer to the following delegation arrangement applicable to this CEI.

          Arrangements                                    Delegates and Source
          Under subsection 38(1) of the FMA Act, to       Financial Management and Accountability
          enter into an arrangement to borrow money       (Finance Minister to Finance Secretary)
          by way of an advance to the Commonwealth        Delegation Instrument
          (including the advance on an overdraft) so
          long as the advance is to be repaid by the
          Commonwealth within ninety (90) days.

          Limits apply (refer to the delegation
          instrument)
          Under subsection 38(2) of the FMA Act, to       Financial Management and Accountability
          enter into agreements for borrowing money       (Finance Minister to Finance Secretary)
          from banks or other persons, where the          Delegation Instrument
          agreements require the money to be repaid
          within 60 days after the Commonwealth is        Internal Financial Delegations Instrument
          notified by the lender of the amount
          borrowed.


                                                  168
          Arrangements                                    Delegates and Source

          Limits apply (refer to the delegation
          instrument)
          Under section 39 of the FMA Act, to invest      Financial Management and Accountability
          public monies in any authorised investment.     (Finance Minister to Finance Secretary)
                                                          Delegation Instrument
          Limits apply (refer to the delegation
          instrument)

5.       Controls
5.1.1.   The key controls are:
         (a) limited delegations both in respect of investments and borrowing;
         (b) suspicious transaction reporting;
         (c) system and process controls built into financial, HR and other departmental systems;
         (d) reporting requirements; and
         (e) internal and external audits.
5.1.2.   Also refer to CEI 1.2 – Preventing Fraud and CEI 5 – Commonwealth Credit Cards and Credit
         Vouchers.

6.       Reference topics
6.1.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997
                                  Criminal Code Act 1995

                                  Public Service Act 1999
          Finance                 2009/02 - The National Public Private Partnerships (PPP) Policy
          Circulars                Framework and National PPP Guidelines
                                  2008/07 - Relevant Agency Receipts - FMA Regulations 15 and 16
                                  2006/06 - Australian Government Foreign Exchange Risk
                                   Management Guidelines
                                  2005/11 - Investment of public money - section 39 of the Financial
                                   Management and Accountability Act 1997
                                  2005/05 - Investment of Surplus Money
          CEIs/Operational        5 – Commonwealth Credit Cards and Credit Vouchers
          Guidelines
          Forms                   Nil
          Other                   Guidelines for the Management of Special Accounts 2003

6.2.     Key contacts

          Branch               Contact for Advice on
          Procurement           This CEI and Operational Guideline.
          Assistance and        Internal Delegation issues
          Financial Policy
          Team, Financial
          Services Branch
          Treasury,                Handling and reporting of public money.
          Taxation and             Credit cards.
          Asset
          Management
          Team, Financial
          Operations



                                                  169
  Branch               Contact for Advice on
  Branch

There is no Operational Guideline for this topic. Staff members should contact the relevant
                              Branch for more information.




                                         170
SPECIAL PUBLIC MONEY - CHIEF EXECUTIVE INSTRUCTION 7.6 (V 1 – 07/2012)

1.       General

          Special public money is public money held by the Commonwealth on behalf of someone
          else. It is not for the use or benefit of the Commonwealth. Trust money held by the
          Commonwealth is one type of special public money, which is subject to trust law in addition to
          the requirements of the FMA Act.

          Section 16 of the FMA Act allows the Finance Minister to issue Special Instructions about
          special public money.

          INSTRUCTIONS – Staff responsible for handling special public money


                 You must ensure that special public money is only used for the purpose for which it
                  is held by the Commonwealth.
                 You must comply with any Special Instructions issued by the Finance Minister
                  about special public money.
                 Where special public money received is trust money, you must:
                      - comply with the requirements of the trust; and
                      - ensure that the amount standing to the credit of each trust can be identified
                           at all times through a separate ledger in your agency’s accounting records.
                 When a separate bank account is used to manage special public money, it must be
                  opened and maintained in accordance with the instructions in the CEI on Banking.
                                                                         Whole of Government Model CEI Provision


1.1.     Instructions - administration of special public money
1.1.1.   Special public money is to be reported in accordance with all legislative requirements
         (including the Finance Ministers Order’s).

2.       Controls
2.1.1.   The key controls are:
         (a)    limited delegation and certificate of compliance reporting;
         (b)    documentation and reporting requirements;
         (c)    separation of duties;
         (d)    monthly reconciliations;
         (e)    system and process controls built into financial, HR and other departmental systems;
         (f)    suspicious transactions reporting; and
         (g)    internal and external audits.

3.       Delegations and directions
3.1.1.   The Finance Minister has retained the powers and functions under section 16 of the FMA Act.
         Staff members are expected to follow the conditions outlined in this CEI.
3.1.2.   The following responsibilities also apply:

          Position                       Responsibility
          Chief Financial Officer         Ensure special public money is administered by the
                                           Department in accordance with the legislation and policies
                                           of the Government.




                                                  171
        Position                      Responsibility
        Group and Specialist           Ensure special public money they are responsible for is
        Financial Advisors and the      administered in accordance with the legislation and
        Treasury, Taxation and          policies of the Government, including keeping proper
        Asset Management Team,          records and reporting as required.
        Financial Operations
        Branch

4.     References
4.1.   Key references

        Legislation            Financial Management and Accountability Act 1997
                               Financial Management and Accountability Regulations 1997

        Finance Circular       2008/07 - Relevant Agency Receipts - FMA Regulations 15 and 16
                               2003/10 – Special Instruction regarding Special Public Money
                               2003/08 – Removal of Trust Accounts and Creation of Special
                                Public Money accounts
        CEIs/Operational       7.1 – Receiving Public Money
        Guidelines             7.3 – Loss and Recovery of Public Money
        Forms                  Nil
        Other                  Agency Banking Framework Guidance Manual

4.2.   Key contacts

        Branch              Contact for Advice on
        Procurement          This CEI and Operational Guideline
        Assistance and       Internal Delegation issues
        Financial Policy
        Team, Financial
        Services Branch
        Treasury,              Handling and reporting of special public money.
        Taxation and
        Asset
        Management
        Team, Financial
        Operations
        Branch


There is no Operational Guideline for this topic. Staff members should contact the relevant Branch
                                       for more information.




                                               172
SPECIAL ACCOUNTS - CHIEF EXECUTIVE INSTRUCTION 7.7 (V1 – 07/2012)

1.       General

          Special Accounts are an appropriation mechanism to draw public money from the CRF
          for particular purposes. They are not bank accounts.

          Special Accounts can be established by the Finance Minister under section 20 of the
          FMA Act, or through separate legislation as recognised under section 21 of the FMA Act.

          INSTRUCTIONS – Staff involved with the use and management of Special Accounts

                 You must ensure that only those amounts that have been identified for crediting to a
                  Special Account are credited to it.
                 You must ensure that amounts are only debited from a Special Account in
                  accordance with the purposes for which it was established.
                 You must comply with the requirements of FMA Regulations 7-12 (see CEI -
                  Committing to Spend Public Money) when committing to spend money from a Special
                  Account.
                 You must not use money from a Special Account to make a payment, unless you are
                  authorised to do so by a valid drawing right.
                   o Before exercising the drawing right, you must ensure that the balance of the
                       Special Account is sufficient to cover the proposed payment (see CEI - Making
                       Payments of Public Money).
                 Moneys from a Special Account must not be invested or earn interest, unless the
                  authority to invest such moneys has been provided by the Finance Minister under
                  section 39 of the FMA Act.
                 You should consult with Finance prior to establishing a Special Account.
                                                                          Whole of Government Model CEI Provision


1.1.1.   All requests to establish a special account should be directed to the Chief Financial Officer.
1.1.2.   In using a special account, the limited on any appropriation must not be exceeded (ie: the
         balance of the special account must never be negative).

2.       Delegations and directions
2.1.1.   The Finance Minister has retained the powers and functions under section 20 of the FMA Act.
         Staff members are expected to follow the conditions outlined in this CEI.
2.1.2.   The following responsibilities also apply:

          Position                  Responsibility
          Chief Financial Officer    Ensure special accounts of the Department are administered in
                                      accordance with the legislation and policies of the
                                      Government.
          Group and Specialist       Ensure special accounts they are responsible for are
          Financial Advisors and      administered in accordance with the legislation and policies of
          the Treasury, Taxation      the Government, including keeping proper records and
          and Asset                   reporting as required.
          Management Team,
          Financial Operations
          Branch




                                                   173
2.1.3.

SPECIAL ACCOUNTS - OPERATIONAL GUIDELINE 7.7

1.       General
1.1.1.   All staff members have a responsibility to ensure that special accounts are managed in a way
         that ensures the proper use of public money and that is consistent with each special account
         Determination.

2.       Process - management of special accounts
2.1.1.   The establishment and use of special accounts are to be undertaken in accordance with the
         Guidelines for Management of Special Accounts and Finance Circular 2009/01 –
         An Introduction to Special Accounts.

2.2.     Determination of special accounts
2.2.1.   Only when it is clear that other types of appropriations are not suitable should special
         accounts be considered as an appropriation.
2.2.2.   When evaluating the need to establish a special account, staff members should refer to
         Finance Circular 2009/01 – Special Accounts for guidance.

2.3.     Establishment of a special account
2.3.1.   The Chief Financial Officer manages all Departmental requests relating to special accounts.
2.3.2.   If the establishment of a special account is requested, staff members should consult with the
         Department’s Financial Services Branch and Financial Operations Branch who will, in turn,
         liaise with Legal Services Branch, Parliamentary Coordination Unit, Legislative Review
         Branch, Cash Management Branch and Financial Framework Branch (as required).
2.3.3.   If a special account is established, either through a written determination of the Finance
         Minister under section 20 of the FMA Act or by Act of Parliament under section 21 of the FMA
         Act, the request should include.
         (a)      details the reasons why the special account needs to be established (as above);
         (b)      outlines the purpose(s) and scope of the special account;
         (c)      proposed types of credits to and debits; and
         (d)      the amounts to be, or required to be ,credited to the special account.

2.4.     Management of a special account
2.4.1.   Staff members must ensure that the special accounts are only used in accordance with its
         purpose and managed in accordance with the provisions of the enacting determination.
2.4.2.   Records must be maintained by the area with responsibility for the special account.
2.4.3.   In maintaining records, staff members must ensure that the balance of the account does not
         become negative (as no overdraft facility is available).
2.4.4.   In circumstances where the purpose of the special account has changed/been altered during
         the year, best practice treatment would be similar to that where a special account has been
         abolished and a new one created.
2.4.5.   The SES owner of a special account (who has responsibility for reporting the special account
         in the Certificate of Compliance) should ensure that the recording and reporting of special
         accounts is undertaken (as required).

2.5.     Periodic reviews and abolition of special accounts
2.5.1.   Periodic reviews are to be conducted and if the purpose of each special account has been
         fulfilled and there is no likelihood of further activity, then the Chief Financial Officer should be
         consulted about requesting its abolition.




                                                     174
2.5.2.   If a special account is requested to be abolished, staff members should consult with the
         relevant areas and consider what actions will need to be taken prior to abolition occurring.
         Following this, a brief is to be submitted to the Finance Minister outlining the details as to why
         the account is no longer required and requesting that the account be abolished in consultation
         with Financial Framework Policy Branch, Legislative Review Branch and Cash Management
         Branch.
2.5.3.   Upon abolition, the right to spend amounts that stood to the credit of that special account is
         extinguished.

3.       Controls
3.1.1.   The key controls are:
         (a)    limited delegation and certificate of compliance reporting;
         (b)    documentation and reporting requirements;
         (c)    separation of duties;
         (d)    monthly reconciliations;
         (e)    system and process controls built into financial, HR and other departmental systems;
         (f)    suspicious transactions reporting; and
         (g)    internal and external audits.

4.       Reference topics
4.1.     Key references

          Legislation              Financial Management and Accountability Act 1997
                                   Financial Management and Accountability Regulations 1997

          Finance Circular         2009/01 – An Introduction to Special Accounts
                                  2008/07 - Relevant Agency Receipts - FMA Regulations 15 and 16
          Forms                   Nil
          Other                   Guidelines for the Management of Special Accounts, Department of
                                   Finance and Administration, 2003.
                                  Chart of Special Accounts
                                  Implementing Machinery of Government Changes: A Good
                                   Practice Guide,

4.2.     Key contacts

          Branch               Contact for Advice on
          Group and             Special Accounts.
          Specialist
          Financial Advisors
          and the Treasury,
          Tax and Asset
          Management
          Team, Financial
          Operations
          Branch
          Procurement              This CEI and Operational Guideline.
          Assistance and           Internal Delegation issues.
          Financial Policy
          Team, Financial
          Services Branch




                                                   175
FEES AND CHARGES – CHIEF EXECUTIVE INSTRUCTION 7.8 (V1 – 07/2012)

1.       General

           FMA Act agencies may charge for goods and services provided to other government
           agencies, the non-government sector and/or other persons, where they are not funded
           through the budget process to provide those goods or services.

           There are two policies of the Australian Government that relate to charging: cost recovery
           and competitive neutrality. Cost recovery encompasses fees and levies related to the
           government provision of goods and services to the non-government sectors of the
           economy. The principle of “Competitive Neutrality” (CN) requires that government business
           activities do not enjoy a net competitive advantage over their private sector competitors by
           virtue of their public ownership.

           INSTRUCTIONS – All Staff

                   If you are responsible for providing goods or services to other government
                    agencies, the non-government sector or other persons, you must:
                         - consider whether charges for those goods and services should be applied
                             and whether your agency has the authority to charge;
                         - have regard to the Australian Government’s policy on cost recovery; and
                         - ensure that the Australian Government’s competitive neutrality
                             arrangements are applied, where the agency conducts a significant
                             government business activity.
                                                                         Whole of Government Model CEI Provision


1.1.1.   As a general principle, the Department should charge for goods and services provided where
         they are not funded through the budget process and/or there is not a case to provide goods or
         services free of charge.
1.1.2.   Competitive neutrality should be implemented unless the cost exceeds the benefit. If the cost
         exceeds the benefits, the Department should still apply other aspects of Competitive
         Neutrality such as tax and debt neutrality.
1.1.3.   You should consult with the Chief Financial Officer on cost recovery and competitive neutrality
         activities when fees and charges are being considered for implementation.

2.       Delegations and directions
2.1.1.   While there are no FMA delegations, the following responsibilities apply.

          Position                  Responsibility
          Secretary or Executive     Certify that the Cost Recovery Impact Statement complies
          Board                        with the policy.
          Deputy Secretary           Ensure that the principles of cost recovery and competitive
                                       neutrality are applied and administered as required for their
                                       areas of responsibility.
          Chief Financial Officer    Ensure that the principles of cost recovery and competitive
                                       neutrality are applied and administered as required in the
                                       Department.
                                     Ensure that payments or receipts related to competitive
                                       neutrality or cost recover activities are recorded and reported
                                       as required.




                                                  176
FEES AND CHARGES - OPERATIONAL GUIDELINE 7.8

1.       Cost recovery
1.1.     General
1.1.1.   The Australian Government's cost recovery policy establishes a framework for consistent,
         transparent and accountable cost recovery arrangements, which promote the efficient
         allocation of resources. The underlying principle is that entities should set charges to recover
         all the costs of goods or services where it is efficient and effective to do so, where the
         beneficiaries are a narrow and identifiable group and where charging is consistent with
         Australian Government policy objectives.

1.2.     Costs to be included
1.2.1.   Cost recovery is the recovery of some or all of the costs of a particular activity.
1.2.2.   All cost recovery charges should have appropriate legal authority. Charges fall into two broad
         categories:
         (a) fees for goods and services; and
         (b) ‘cost recovery’ taxes (primarily levies, but also some excises and customs duties).
1.2.3.   The costs that should be included in charges may differ depending on the activity being
         recovered. Any functions undertaken that are integral to the activity are appropriate and
         efficient to include in cost recovery (see the ‘Australian Government Cost Recovery
         Guidelines’).

1.3.     Process and requirements
1.3.1.   The policy outlined in the Australian Government Cost Recovery Guidelines and Finance
         Circulars 2005/09 and 2008/08 should be followed when considering or undertaking cost
         recovery activities.
1.3.2.   Where appropriate, the application of cost recovery should be considered in relation to
         departmental business operations.
1.3.3.   Staff members should document whether or not cost recovery is to be undertaken. Decisions
         should be documented.

1.4.     Consultation
1.4.1.   The Chief Financial Officer should be consulted and legal advice obtained at an early stage to
         determine appropriate legal authority regarding cost recovery charges.

1.5.     Cost Recovery Impact Statement (CRIS)
1.5.1.   ‘Significant’ cost recovery arrangements must document compliance with the cost recovery
         policy in a Cost Recovery Impact Statement. Staff members should refer to ‘Stage 3: Cost
         Recovery Impact Statement Process’ of the ‘Cost Recovery Guidelines’ to determine whether
         a cost recovery arrangement is considered ‘significant’ and what should be included in a
         CRIS. The cost recovery impact statement (CRIS) template can also be used.
1.5.2.   A summary of the CRIS is to be included in the Portfolio Budget Submission and Portfolio
         Budget Statements. Once completed, a decision is to be made as to whether the CRIS is
         published on the Department’s website.

2.       Competitive neutrality
2.1.     General
2.1.1.   The principle of ‘competitive neutrality’ requires that government business activities not to
         enjoy a net competitive advantage over their private sector competitors by virtue of their




                                                   177
         public ownership. Competitive neutrality improves the transparency and accountability of
         government businesses and ensure that public resources are used efficiently.
2.1.2.   Competitive Neutrality should be applied to significant business activities of the Department. It
         does not apply to non-business, non-profit activities. The decision not to apply aspects of
         Competitive Neutrality to a significant business activity (eg: costs exceeds benefits) must be
         approved by the Finance Minister.

2.2.     Process and requirements
2.2.1.   The policy outlined in Financial Management Guidance No.4 - Australian Government Cost
         Recovery Guidelines and Finance Circular 2004/01 – Australian Government Competitive
         Neutrality Guidelines for Managers should be followed when considering competitive
         neutrality (including implementation).
2.2.2.   Competitive Neutrality should be implemented unless the cost exceeds the benefit.
2.2.3.   Where appropriate, the application of competitive neutrality should be considered in relation to
         departmental business operations.
2.2.4.   Where competitive neutrality applies, unless given approval by the Finance Minister,
         departmental business operations are required to make adjustments to their cost structure for
         known competitive advantages as outlined in the Competitive Neutrality Guidelines (such as
         taxation, regulatory compliance and rate of return).
2.2.5.   Staff members should document whether or not an activity is a business activity for the
         purposes of the competitive neutrality policy. Decisions not to apply any component of
         competitive neutrality adjustments to a significant business activity must be approved by the
         Finance Minister.

2.3.     Requests
2.3.1.   All requests relating to compliance with Competitive Neutrality guidelines and Competitive
         Neutrality payments should be directed to the Chief Financial Officer.

2.4.     Market testing
2.4.1.   Competitive neutrality considerations should apply when market testing an agency’s in-house
         functions.

2.5.     Cost/benefit test
2.5.1.   The general assumption to be applied is that benefits of competitive neutrality generally
         outweigh the costs. Benefits can include:
         (a) the adoption of improved business practices by public sector businesses;
         (b) establishing a better basis for resource allocation decisions by business managers;
         (c) improved accountability and transparency;
         (d) improved competitiveness of Australia’s private sector service provision; and
         (e) the unwinding of cross-subsidies in service provision.
2.5.2.   Costs may include:
         (a) changes to accounting systems;
         (b) asset valuations; and
         (c) reviews of activities and general administration.

2.6.     Adjustments
2.6.1.   Where competitive neutrality applies, departmental business operations are required to make
         adjustments to their cost structure for known competitive advantages. Key areas of known
         advantages include taxation, debt, regulatory, rate of return and costing of shared services).
2.6.2.   The cost structure must fully reflect the adjustment for each key area where applicable. All
         decisions to support any approach that is adopted must documented.




                                                   178
2.7.     Payments
2.7.1.   Where competitive neutrality applies, departmental business operations are required to make
         payments to give effect to:
         (a)     a taxation neutrality adjustment;
         (b)     a debt neutrality adjustment;
         (c)     a regulatory neutrality adjustment; and/or
         (d)     other competitive neutrality adjustments.
2.7.2.   Payments (in accordance with the process outlined in the Competitive Neutrality Guidelines)
         are required to be paid to the Official Public Account (OPA) by 1 June in the financial year in
         which the payment relates. Where the total amount payable for the adjustment is subject to
         business activities that occur after 1 June but prior to 1 July, estimates are required for the
         impact of these activities on payments and include them as appropriate.

2.8.     Reporting
2.8.1.   Staff members are to ensure that the Department fulfils its reporting obligations regarding
         competitive neutrality policy and competitive neutrality payments.

2.9.     Competitive Neutrality Complaints
2.9.1.   Parties can lodge complaints with the Australian Government Competitive Neutrality
         Complaints Office if they consider that a government business activity is not complying with its
         competitive neutrality obligations.

3.       Reporting
3.1.1.   Cost recovery and competitive neutrality activities should be reported in accordance with any
         applicable legislative or policy requirements.

4.       Controls
4.1.1.   The key controls are:
         (a)    CRIS endorsement by the Secretary or Executive Board;
         (b)    delegation limitations in respect of competitive neutrality;
         (c)    Deputy Secretaries are to review operations as appropriate to ensure competitive
                neutrality policy requirements are met (currently only Comcover and Property are
                affected); and
         (d)    consultation with the Chief Financial Officer.

5.       Reference topics
5.1.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997

          Finance Circular        2011/07 - Certificate of Compliance - FMA Act Agencies

                                  2008/08 – Changes to Cost Recovery Arrangements
                                  2008/07 - Relevant Agency Receipts - FMA Regulations 15 and 16
                                  2005/09 – Australian Government Cost Recovery Guidelines
                                  2004/01 – Australian Government Competitive Neutrality
                                   Guidelines for Managers

          Forms                   Cost recovery impact statement (CRIS) template




                                                   179
       Other                   Cost Recovery Impact Statement
                               Financial Management Guidance No.4 - Australian Government
                                Cost Recovery Guidelines
                               Financial Management Guidance No.9 - Australian Government
                                Competitive Neutrality Guidelines for Managers
                               Corrigendum issued on 30 April 2004 regarding example on page
                                20 of the Commonwealth Competitive Neutrality - Guidelines for
                                Managers
                               Commonwealth Neutrality Policy Statement
                               Commonwealth Competitive Neutrality - Guidelines for Managers
                               Australian Government Competitive Neutrality Complaints Office
                               Finance Minister’s Orders for Financial Reporting

5.2.   Key contacts

       Branch               Contact for Advice on
       Legal Services        Terms of an arrangement.
       Branch
       Group Financial         Setting up arrangements for handling cost recoveries.
       Advisors,
       Financial Services
       Branch

       Treasury,
       Taxation and
       Asset
       Management
       Team,Financial
       Operations
       Branch
       Procurement             This CEI and Operational Guideline.
       Assistance and          Internal Delegation issues.
       Financial Policy
       Team




                                              180
CEI/OG 8 - HANDLING OF PUBLIC MONEY BY PERSONS OUTSIDE
OF THE COMMONWEALTH
INTRODUCTION
About this CEI
This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction to
staff members on arrangements where a person outside of the Commonwealth handles public
money.

Who is an outsider?
An outsider is any person other than a Minister or a staff member. For example, a contractor or
consultant (including a company) involved in an arrangement with the Commonwealth for the
provision of goods or services, such as administrative or management services undertaken for the
Commonwealth.

Arrangements with persons outside the Commonwealth
Before entering into any arrangement or agreement, it is important for staff members to consider
whether it could involve a person outside the Commonwealth handling public money, whether
deliberately or without knowing it.

Public money is a broad concept and it is not uncommon for persons outside the Commonwealth to
handle public money. Any person authorised through legislation or an arrangement to act on the
agency’s behalf, for example, to collect fees or levies or to make payments, is considered to be
handling public money.

The FMA Act provides two ways in which agency employees and others can lawfully handle public
money.

Allocated officials
The default position is that when a person outside the Commonwealth performs a financial task (e.g.
makes payments or collects fees), as defined in FMA Regulation 3, in relation to public money, they
temporarily become an official of the agency for which they perform the task. As an allocated
official, the outsider is subject to all financial management framework requirements, including the
FMA Act and Regulations, the FMOs, policies of the Commonwealth and the agency’s CEIs, when
performing the financial task.

Outsiders may be authorised to handle public money under section 12 of the FMA Act
Section 12 of the FMA Act gives the Finance Minister the power to authorise an agreement or
arrangement under which public money will be received, held or paid by an outsider. This power has
been delegated to all Chief Executives with directions.

An outsider, who receives, has custody or, or makes payments of public money under an
arrangement authorised under section 12 does not become an “official”. Instead, they are only
subject to the requirements of section 12 and the contractual terms and conditions of the
arrangement. However, it is essential to mitigate the risks of such an arrangement by developing
appropriate contractual terms and conditions and managing the arrangement closely.
                                                                       Whole of Government Model CEI Provision




                                                 181
Instances of Non Compliance
All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).




                                                 182
HANDLING OF MONEY BY PERSONS OUTSIDE OF THE COMMONWEALTH –
CHIEF EXECUTIVE INSTRUCTION 8 (V1 – 7/2012)
1.      General
1.1.1. ‘Persons outside of the Commonwealth’ includes both allocated officials and outsiders. It may
       also include sub-contractors.
1.1.2. The delegate will need to make an assessment as to the most appropriate mechanism to use
       (either through an arrangement authorised under subsection 12(1) of the FMA Act or by
       allowing the external parties to become allocated officials).


         INSTRUCTIONS – All staff
             You must not enter into an agreement or arrangement for the receipt, custody or
               payment of public money by an outsider, unless the arrangement:
                   - is authorised in writing by the Finance Minister or a delegate under section
                        12 of the FMA Act before being entered into;
                   - is expressly authorised by the FMA Act or by another Act; or
                   - results in the outsider becoming an allocated official of the agency when
                        performing a financial task, as defined in FMA Regulation 3.
             When entering into an agreement or arrangement for the receipt, custody or payment
               of public money by an outsider, you must ensure that the requirements of FMA
               Regulations 7-12 are complied with (see CEI – Committing to Spend Public Money).
                                                                       Whole of Government Model CEI Provision


1.1.3. You should generally not establish an arrangement for persons outside of the Commonwealth
       except where a business case is established.


         INSTRUCTIONS – Staff with a delegation to authorise outsider arrangements
             When authorising an agreement or arrangement for the receipt, custody or payment
               of public money by an outsider, you must comply with the directions in the
               delegation from the Finance Minister or any directions in the delegation from your
               Chief Executive.

         Authorising an arrangement under section 12 of the FMA Act
              You must be satisfied that the agreement or arrangement:
                     - serves the Commonwealth’s interests;
                     - ensures that public money remains in a non-official bank account for the
                          shortest time reasonable; and
                     - achieves the most efficient and effective transmission of public money to an
                          official account, or, in the case of a payment, to the recipient.
              You must not authorise an agreement or arrangement unless you are satisfied that
                 the risks which might arise from it will be managed in the best interests of the
                 Commonwealth.

         Ensuring compliance with guidelines for arrangements under section 12 of the FMA Act
             You must not authorise an agreement or arrangement which provides for the
                outsider to engage in procurement, unless you are satisfied that the agreement or
                arrangement requires the outsider to comply with the CPRs to the greatest extent
                possible (this requirement does not apply in relation to the procurement of property



                                                 183
                 or services for the purpose of providing a statutory or employment entitlement, such
                 as an Senior Executive Service vehicle).
                You must not authorise an agreement or arrangement which provides for the
                 outsider to undertake grants administration, unless you are satisfied that the
                 agreement or arrangement requires the outsider to comply with the CGGs to the
                 greatest extent possible.

         Period of arrangement under section 12 of the FMA Act
              You must not authorise an agreement or arrangement for a period greater than five
                 years.
              You must ensure that the agreement or arrangement provides for the
                 Commonwealth to give notice to terminate the agreement or arrangement at any
                 time.

         Banking requirements for arrangements under section 12 of the FMA Act
             You must ensure that the agreement or arrangement specifies:
                    o the banking arrangements which are to be followed by the outsider;
                    o that any interest earned on public money by the outsider must be remitted in
                        full to the agency;
                    o the timing or frequency of remittance of public money to the agency, where
                        the arrangement provides for the outsider to receive or hold public money;
                        and
                    o the timing or frequency of payments of public money to the intended
                        recipient, where the arrangement provides for the outsider to make
                        payments of public money.
             When specifying the timing or frequency of remittance or payment of public money,
                you must base the timing or frequency on the best cash management outcome for
                the Commonwealth, balanced against any savings or cost advantages for less
                frequent remittances or payments, together with an assessment of the risks
                associated with the money being held in a non-official bank account.
                                                                Whole of Government Model CEI Provision


1.1.4. The contract manager should ensure that throughout the life of the agreement:
        (a) the requirements of the financial management framework are met;
        (b) allocated officials involved in the arrangement understand and adhere to the
            requirements of the financial management framework; and
        (c) person(s) authorised by an arrangement under subsection 12(1) of the FMA Act
            understand and adhere to the requirements of the conditions of the authorised section 12
            agreement.

2.      Delegations and directions
2.1.1. You should refer to the following delegation arrangements applicable to this CEI.

         Arrangements                                  Source (including list of delegates)
         Under FMA Act subsection 12(1), to give a     Financial Management and Accountability
         written authorisation for an agreement or     (Finance Minister to Finance Secretary)
         arrangement for the receipt, custody or       Delegation Instrument
         payment of public money by an outsider.
                                                       Internal Financial Delegations Instrument
         Limits apply (refer to the delegation
         instrument)
         Under FMA Regulation 9, the approval of       Financial Management and Accountability
         spending proposals by allocated officials.    (Finance Minister to Finance Secretary)
                                                       Delegation



                                                 184
Arrangements                                  Source (including list of delegates)
Limits apply (refer to the delegation
instrument)                                   Internal Financial Delegations Instrument
Under FMA Act section 44, enter into or       Internal Financial Delegations Instrument
vary directions in a way that promotes the
proper use of Commonwealth resources.

Limits apply (refer to the delegation
instrument)




                                        185
HANDLING OF MONEY BY PERSONS OUTSIDE OF THE COMMONWEALTH –
OPERATIONAL GUIDELINE 8
1.      About handling of public money - process guide
1.1.    Preparation and approval of arrangement
1.2.1   To determine how the handling of public money interacts with Finance’s administration of
        funds/receipts, staff members should contact the Treasury, Tax and Asset Management
        Team, Financial Operations Branch.
1.2.2   Requests for an arrangement to be authorised under section 12 of the FMA Act should
        include:
        (a) what the arrangement is for, why it is required and why it is in the Commonwealth’s
             interests to establish (achieving best cash management outcomes);
        (b) the mechanism being proposed and why it is the most appropriate;
        (c) whether public money will be handled in any way by the allocated official;
        (d) the estimated amount of public money involved (based on the nature of the arrangement,
             ie: the total expected to be handled in the life of the arrangement and/or daily, monthly
             transactions etc);
        (e) whether the arrangement will include the receipt, custody or payment of public money;
        (f) the persons or positions being provided with the authority (including if there may be sub-
             contractors);
        (g) how the public money will be handled including banking, interest, approval of payments,
             taxation requirements, handling of under/overpayments and any discretion proposed;
        (h) how the provider of the arrangement will be paid and whether fees or charges will be
             deducted from the public money being handled;
        (i) the period of the arrangement;
        (j) the approach to be used to ensure that set requirements (ie: the obligations of the
             financial management framework) are met by the person outside the Commonwealth and
             how this will be monitored by the Department;
        (k) the risks and how they will be managed;
        (l) how non-compliance with the arrangement will be managed;
        (m) whether any other supporting arrangement is required, such as a Drawing Right or
             Special Account; and
        (n) any other requirements including those of FMA regulations 7-12 or the directions in the
             ‘Financial Management and Accountability (Finance Minister to Finance Secretary)
             Delegation Instrument’ and/or ‘Internal Financial Delegations Instrument’ (the extent to
             which a person outside of the Commonwealth works within Finance’s internal operations
             will determine whether they need to comply with the CEIs).
1.2.3   In considering such requests, the delegate is to be satisfied that the arrangement is in the
        Commonwealth’s interest and can be managed appropriately within the requirements of the
        financial framework.

1.2.    Entering into arrangement
1.2.1   In entering into an arrangement staff members are to ensure that the terms of the agreement
        are understood by the person outside of the Commonwealth. In particular, the:
        (a) nature of the authorisation (outsider or allocated official);
        (b) extent of the authorisation (including the requirement to comply with the FMA legislation);
        (c) requirements/terms (based on the relevant elements canvassed above);
        (d) how persons outside of the Commonwealth will be trained/informed of these
             requirements on an ongoing basis;
        (e) how the public money is to be handled, accounted for and reporting requirements; and



                                                 186
         (f)   how and when the Department is to be notified of changes that may impact on the
               arrangement.


1.3.     Changing an arrangement
1.3.1    If changes are required to an arrangement already in place, a new authorisation under
         FMA section 12 must be made.

1.4.     Reporting and management of arrangements
1.4.1.   Sufficient and complete documentation is to be maintained and made available if requested
         by any party to the arrangement.
1.4.2.   Throughout the life of the arrangement, regular reviews, being documented as appropriate,
         are to be undertaken by the contract manager to ensure the terms the arrangement are met.
1.4.3.   Where there are indications of the incorrect or improper use or handling of public money by a
         person outside of the Commonwealth, staff members should investigate the issue, reporting it
         to their supervisor, addressing if necessary what has occurred and taking steps to ensure that
         it does not occur again. In doing so, staff members should also consider the potential for a
         breach of contract to have occurred.

2.       Controls
2.1.1.   The key controls in relation to the management of public money being handled by persons
         outside of the Commonwealth are:
         (a) contract manager actively manages the arrangement;
         (b) the Certificate of Compliance (Group questionnaire);
         (c) limited delegates;
         (d) adherence to Fraud Control Guidelines; and
         (e) internal and external audits.

3.       Reference topics
3.1.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997
                               
          CEIs/Operational        6.1 – Drawing Rights
          Guidelines              7.3 – Loss and Recovery of Public Money
          Forms                   Nil
          Finance                 2011/01 – Commitments to spend public money (FMA Regulations
          Circulars                7 to 12)

3.2.     Key contacts

          Branch               Contact for Advice on
          Legal Services        Terms of arrangement with persons outside of the Commonwealth.
          Branch
          Treasury, Tax and       Handling of public money (banking, receipting etc).
          Asset
          Management
          Team, Financial
          Operations
          Branch
          Procurement             This CEI and Operational Guideline
          Assistance and          Internal Delegation issues.
          Financial Policy



                                                  187
Branch            Contact for Advice on
Team, Financial
Services Branch




                                   188
CEI/OG 9 - MANAGING DEBT
INTRODUCTION

 About this CEI

 This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction to
 staff members on the management of debts and amounts owing to the Commonwealth.

 What is a debt?

 A debt is money owing to the Commonwealth, such as money owing as a result of an agreement, a
 transaction or legislation. For example, a staff member who has been overpaid a salary, or a person
 who has been overpaid a social security payment, may owe a debt to the Commonwealth as a result
 of the overpayment.

 The FMA Act deals specifically with “debts” and “amounts owing to the Commonwealth”. Generally, a
 “debt” is a sum of money owing to the Commonwealth, which is known and not being disputed, due
 for payment now, and capable of being recovered. By contrast, an “amount owing to the
 Commonwealth” may not yet be due for payment (e.g. an invoice has been issued but payment is not
 due until next month).

 It is important that you can identify and distinguish between a debt and an amount owing to the
 Commonwealth. Amounts owing to the Commonwealth include all debts to the Commonwealth, as
 well as all amounts owing that are not yet due for payment. If you are unsure in a particular case, you
 should seek advice from your CFO Unit.

 Principles of debt recovery

 Debts and amounts owing to the Commonwealth represent a cost to taxpayers if not recovered and
 should therefore be pursued to the greatest possible extent.

 Subsection 47(1) of the FMA Act obliges Chief Executives to pursue recovery of all debts for which
 they are responsible, unless the debt has been written off as authorised by an Act, or it is considered
 that the debt is not legally recoverable or that recovery is not economical to pursue. A Chief
 Executive is responsible for debts owing to the Commonwealth in relation to the operations of their
 agency and any other debts that the Finance Minister has allocated to them.

 In relation to amounts owing to the Commonwealth, the general principle is that such amounts should
 immediately be paid in full when they become due for payment. However, in certain circumstances it
 may be appropriate to defer the time for payment, allow payment by instalments, or waive the amount
 owing to the Commonwealth. Section 34 of the FMA Act provides the Finance Minister with the
 power to make such decisions.

                                                                        Whole of Government Model CEI Provision


Instances of Non Compliance

All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).



                                                  189
CHECKLIST GUIDE FOR THE MANAGEMENT OF DEBTS

Process Steps         Debts owed by               Debts owed by               Debts owed by
                      External Parties            Government                  Government Staff
                      (including                  Departments/Agencies        Members (including
                      Parliamentarians)                                       MOP(S) Act staff)

General               Every effort is to be       Every effort is to be       Debts may be
                      made to ensure all          made to ensure all          recovered by way of a
                      outstanding monies          interdepartmental           common law right of
                      are paid as soon as         accounts are settled, at    set-off and recovery
                      possible after receipt of   officer level, as soon as   can be from a staff
                      the invoice.                possible after receipt of   member’s pay or other
                                                  the invoice.                money owing to them
                                                                              (eg. final monies).

Account
Overdue/Debtor
Notification and                 √                            √                         √
Registration of the
Debt

Reminder:
Account/Debt
Overdue by                       √                            √                         √
Standard Terms
(ie. 30 days)

Regular reminders                √                            √                         √

Alternate
arrangements –
instalments,
                                 √                     Not preferred                    √
deferral, non-
recovery, waiver or
postpone

Final
Action/Reminder -
                                 √                            √                         √
120 days or more
Overdue

Debt collection
                                 √                          N/A                         √
agencies




                                              190
RECOVERY OF DEBTS - CHIEF EXECUTIVE INSTRUCTION 9.1 (V1 – 07/2012)

1.      General

         Section 44 of the FMA Act places a general obligation on Chief Executives to manage the
         affairs of their agencies in a way that promotes the proper use of Commonwealth
         resources. This obligation should guide decision-making about debt management, such as
         the extent to which possible debts are investigated and the methods by which debt recovery
         is pursued under section 47 of the FMA Act.

         INSTRUCTIONS – Staff with a delegation to pursue debt recovery
             You must pursue recovery of each debt for which your Chief Executive is
               responsible, except debts which are:
               - written off as authorised by an Act;
               - not legally recoverable; or
               - not economical to pursue.
                                                                       Whole of Government Model CEI Provision


1.1.1. Debt can occur through administrative errors, receiving incorrect entitlements, the loss of
       public money or property, or through goods or services being provided by the Department on
       credit and payment not being received in agreed timeframes.
1.1.2. Prior to extending credit, you should take reasonable steps to establish the other party has
       the ability to repay any amounts for goods and/or services owing.
1.1.3. You are to:
       (a) ensure that the Department’s standard terms of trade for monies or debts owing (30 days
            from issuing of the invoice) is documented in any arrangement;
       (b) where appropriate and legally available, include in a contract the right for the Department
            to offset any debt from other monies owing under the contract;
       (c) treat amounts not received within the standard terms of trade as overdue and pursue their
            recovery; and
       (d) document and file all debt recovery actions (including decisions about whether or not to
            pursue a debt).
1.1.4. Departmental staff members who incur a debt relating to a personal travel component of
       official travel, personal decision to upgrade the class of travel or actions of a similar nature,
       the debt must be repaid in one payment as soon as possible.

2.      Delegations and directions
3.1.1   You should refer to the following delegation arrangements applicable to this CEI.

         Arrangements                                    Source (including list of delegates)
         Under section 47 of the FMA Act, to pursue      Financial Management and Accountability
         recovery of a debt for which the Chief          (Finance Minister to Finance Secretary)
         Executive is responsible (including debts       Delegation Instrument
         allocated by the Finance Minister to the
         Secretary).                                     Internal Financial Delegations Instrument

         Limits apply. (refer to the delegation
         instruments)




                                                  191
3.1.2   In addition, the following responsibilities are also applicable:

         Position                        Responsibility
          Assistant Secretary,           Ensure debts relating to their area of responsibility are
            HR Services Branch              recovered promptly.
          First Assistant                Report as required on debts.
            Secretary, Corporate          Maintain documentation of debts and debtors as well as
            Services Division               recovery actions and decisions by delegates relating to
          First Assistant                  their area of responsibility.
            Secretary, Ministerial
            and Parliamentary
            Services Division,
            AMPS
          Group Financial
            Advisors, Financial
            Services Branch
          Specialist Financial
            Advisors, COMCAR,
            Comcover, Ministerial
            and Parliamentary
            Services Division, and
            Property
          Assistant Secretary,               Ensure debts of the Department are recovered promptly.
            Financial Operations              Report as required on debts.
            Branch                            Maintain documentation of debts and debtors for the
                                               Department as well as recovery actions and decisions by
                                               delegates relating to their area of responsibility.
            Chief Financial Officer          Ensure staff members actively pursue the recovery of
                                                debts.
                                              Ensure debts and non recoverable debts are accounted
                                                for and reported as required.




                                                    192
RECOVERY OF DEBTS - OPERATIONAL GUIDELINE 9.1
1.       Recovery of debts
1.1.1.   The effective recovery of debts owing to the Commonwealth is supported by the timely
         reporting of debt and the debt management systems that prompt recovery action; specifically:
         (a) an accurate and clear overpayment notification/accounts receivable invoice being issued
             to the debtor promptly and followed up within the required timeframes; and
         (b) the accounting accuracy of the debtor’s account(s) and balance(s) in the financial
             management information system (SAP).

2.       General process requirements
         Staff members should confirm that the amounts outstanding are a debt and that it is legally
         recoverable. A debt may not be legally recoverable if the debtor has a legal defence to a
         claim for repayment that has a reasonable prospect for success.
2.1.1.   For:
         (a) payroll related debts
                   (i)      for departmental staff HR Services Branch will arrange recovery of the debt
                            via payroll deduction or via an invoice. Details of all payroll debts and their
                            recovery should be maintained in the Overpayment Register each month
                            (with a copy forwarded to the Treasury, Tax and Asset Management Team,
                            Financial Operation Branch).
                   (ii)     MOPS Act employee debts are administered by M&PS Division and are to be
                            pursued in accordance with the current 'Enterprise Agreement for
                            Commonwealth Members of Parliament Staff.
         (b) all other debts
                   (i)      relating to the Department, the details of the debt are to be entered into the
                            FMIS (SAP) through the completion of an Accounts Receivable Form (which
                            is to be sent to the Accounts Processing Unit, Financial Operations Branch);
                            or
                   (ii)     relating to entitlements for current and former Parliamentarians and their
                            staff, such debts are to be pursued by the M&PS Specialist Financial Advice
                            Team.
2.1.2.   At all times, the details of contact between the Department and the debtor must be recorded
         in writing and filed.
2.1.3.   All decisions are to be recorded in writing by the delegate and filed. Documentation should
         outline the reasons for the decision made, particularly in respect of not applying interest or
         application at a reduced rate or agreeing to the repayment by instalments (see also CEI 9.4 –
         Payment by instalments or deferral of the time for payment).
2.1.4.   To facilitate compliance with any directions in the delegation instruments, the debtor should
         be advised in writing (such as by email) of:
          (a) the details of debt , including the circumstances giving rise to the debt;
          (b) the amount of the debt; and
          (c) when agreement is reached regarding repayment, the terms are to be outlined in writing
               (such as by email)to the debtor.

3.       Processing of debts owed by non-Commonwealth parties
         (including Senators and Members)
3.1.1.   Upon confirming that a debt is legally recoverable, the invoice (along with any supporting
         information) is to be sent to the debtor, with a request that the debt be paid in full in one
         payment within 30 days of the invoice being issued.




                                                    193
3.1.2.   Where a debt is not repaid or no alternative arrangements to repay the debt are negotiated
         (including offset if legally available), contact is to be made with the debtor to establish the
         reasons for the non-payment after 60 days.
3.1.3.   Following this, if the debt is not settled or alternative arrangements negotiated, verbal contact
         should be made with the debtor and a follow-up letter sent requesting the immediate payment.
3.1.4.   Regular reminders should be sent to the debtor if no subsequent response/payment is
         received.
3.1.5.   A final reminder should be sent 120 days from the original due date. The letter should
         indicate that legal action may commence if full payment is not received within 14 days of the
         issue of the correspondence.
3.1.6.   Where no response is received from the debtor as a result of a final reminder, the details are
         to be referred to Legal Services Branch for advice.

4.       Processing of debts owed by Commonwealth departments/
         agencies/bodies
4.1.1.   The invoice is to be sent to the debtor with any supporting information.
4.1.2.   Ideally debts are to be paid in full in one payment within 30 days of the invoice being issued.
4.1.3.   If after 30 days, an account is not settled or offset against amounts owing to the agency, a
         follow up letter requesting the urgent payment of the account is to be sent to the debtor.
4.1.4.   If no response is received after the 60 days, a briefing is to be prepared for the relevant area
         to the Chief Financial Officer or First Assistant Secretary, M&PS Division for M&PS related
         debts outlining the details of the debt and action taken to recover the amount.
4.1.5.   As a final reminder the representative should contact their counterpart in the agency to
         negotiate payment and send correspondence as required.
4.1.6.   If the debt remains outstanding and the amount is over $5,000, the debt is to be referred to
         the relevant Deputy Secretary for discussion with their equivalent in the other agency

5.       Processing of debts owed by staff members (other than MOP(S)
         Act employees)
5.1.1.   The overpayment notification or invoice is to be sent to the staff member with any supporting
         information.
5.1.2.   Ideally debts are to be paid in full in one payment. Recovery options can be:
         (a)      through the staff member’s pay including final payments if they are leaving the
                  Department/Australian Public Service;
         (b)      offset by other money owing to the staff member; or
         (c)      be repaid by the staff member through accounts receivable.
5.1.3.   Where the debt relates to a personal travel component of official travel (or actions of a similar
         nature) the option to pay by instalments does not apply and the debt must be repaid in one
         payment as soon as possible.
5.1.4.   Instalment arrangements may apply to payroll debts (refer to CEI 9.4 – Payment by
         Instalments or Deferral).
5.1.5.   In respect of other debts, where payment is not made or alternative arrangements established
         after 30 days, the staff member should be contacted and payment sought or alternative
         arrangements agreed.
5.1.6.   Following the 60 day period, if the debt has not been settled, alternative arrangements are to
         be negotiated and/or verbal contact should be made and a follow-up letter sent requesting the
         immediate payment.
5.1.7.   Regular reminders should be sent if no response/payment is received following an extended
         repayment period.
5.1.8.   A final reminder should be sent no later than 120 days from the original due date. The letter
         should indicate that legal action may commence if full payment is not received within 14 days
         of the issue of the correspondence.


                                                   194
5.1.9.   Where no response is received from the debtor as a result of a final reminder, the details are
         to be referred to Legal Services Branch for advice.

6.       Processing of debts owed by MOP(S) Act employees
6.1.1.   The overpayment notification or invoice is to be sent to the MOP(S) Act employee with any
         supporting information.
6.1.2.   Ideally, debts are to be paid in full in one payment. However, adherence to the conditions of
         the Enterprise Agreement for Commonwealth Members of Parliament staff is required.
6.1.3.   In respect of debts not covered by the Enterprise Agreement for Commonwealth Members of
         Parliament staff, where payment is not made or alternative arrangements established after 60
         days, the MOP(S) Act employee should be contacted and payment sought or alternative
         arrangements agreed.
6.1.4.   Regular reminders should be sent if no response/payment is received. A final reminder
         should be sent no later than 120 days from the original due date. The letter should indicate
         that legal action may commence if full payment is not received within 14 days of the issue of
         the correspondence.
6.1.5.   Where no response is received from the debtor as a result of the final reminder, the details
         may be referred to Legal Services Branch for advice.

7.       Alternative payment options
7.1.1.   Where it is prudent, other options to recover the debt should be explored. Details of the other
         options that may be considered as part of the recovery process are outlined in later CEIs,
         including:
          (a) non-recovery (write off) of debt;
          (b) waiving debts; or
          (c) payment by instalments, deferral or postponement.
7.1.2.   In addition to these mechanisms, where legally available, debts may be offset/deducted from
         monies owing.

8.       Application of interest
8.1.1.   Refer to the directions in the delegation instrument(s) and CEI 9.4 – Payment by Instalments,
         Deferral or Postponement regarding interest.

9.       Cancelling a debt
9.1.1.   A debt may be cancelled at any time by the Department where it is discovered, including
         during a recovery process, that it is no longer/is not a debt. Approval to cancel debts is
         required by the Group or Specialist Financial Advisor.
9.1.2.   Where a debt has been repaid or partly recovered and subsequently cancelled, the Group or
         Specialist Financial Advisor is to arrange for the collected monies to be returned to the debtor.

10.      Legal Services Branch
10.1.1. Debts that are referred to Legal Services Branch for advice should include details of:
        (a)     the current (or last known) address of the debtor;
        (b)     the background to the debt (ie: all documentation that establishes that a debt
                exists/original debt notice/copy of invoices/contract documentation/recovery action
                taken to date);
        (c)     the amount of the debt.
10.1.2. Where it is viable, Legal Services Branch may assist with the pursuing of the debt or
        recommend the services of a debt collection agency to recover an outstanding debt. Where
        debt collection services involve the use of ‘outsiders’, CEI 8 – Outsider Arrangements, must
        be followed.




                                                   195
10.1.3. Following advice from Legal Services Branch, a delegate(s) (that has been delegated the
        power and function under FMA section 47 and FMA regulation 9 (and, where appropriate,
        FMA section 12) may approve the use of a debt collection agency. In doing so, the delegate
        is to consider:
         (a)     the value of the debt;
         (b)     any cost associated with locating the debtor; and
         (c)     the cost of recovering the debt.
10.1.4. Where the use of a debt collection agency is not an effective and efficient use of
        Commonwealth resources or other avenues to recover the debt have been exhausted, steps
        should be taken to write off the debt (refer to CEI 9.2 – Non-recovery of Debt).

11.     Reporting
11.1.1. At the end of each calendar month, the Group/Specialist Financial Advice Teams; HR Team
        (M&PS); Assistant Secretary, HR Services Branch, COOG, are to report to the Chief Financial
        Officer on the extent of collections of outstanding debts for their respective areas of
        responsibility. Reports on the collection of M&PS related debts are also to be provided to the
        First Assistant Secretary, M&PS Division.
11.1.2. M&PS Management and a representative from Legal Services Branch will meet on a regular
        basis to discuss any outstanding M&PS related debts.

12.     Controls
12.1.1. The key controls in relation to the recovery of debts are:
         (a) limited delegations to determine the actions that should be taken in respect of debt;
         (b) requests for waivers are processed by the Special Claims and Land Policy Branch;
         (c) Overpayment Register, debtor records and reporting from SAP/EMS and debt recovery
             by the Accounts Processing Unit and HR Services Branch or the M&PS HR and
             Specialist Financial Advice Team;
         (d) the prompt issue of overdue reminder notices;
         (e) ongoing follow-up on aged debtors and monitoring of repayment of debts;
         (f) documentation of all debts and debtors as well as recovery or non-recovery
             actions/decisions; and
         (g) internal and external audits.

13.     Reference topics
13.1.   Key references

         Legislation                Financial Management and Accountability Act 1997

                                    Financial Management and Accountability Regulations 1997

                                 
         Finance Circulars          2008/07 - Relevant Agency Receipts - FMA Regulations 15 and
                                     16
         CEIs/Operational           2.1 – Approving Spending Proposals and Entering into
         Guidelines                  Arrangements
                                    9.2 – Non-recovery (write-off) of debts
                                    9.3 – Waiving debts
                                    9.4 – Payment by instalments or deferral of the time for
                                     payment
         Forms                      Nil




                                                 196
13.2.   Key contacts

        Branch                 Contact for Advice on
        Legal Services          When to use of debt collection agency services.
        Branch                  Terms of arrangement with persons outside of the
                                  Commonwealth.
                                Access to Finance Legal Panel to commence legal proceedings
                                  for debt recovery.
                                Access to subscription service for identity verification and
                                  customer contact services.
        Accounts Processing     Raising accounts receivable.
        Unit, Financial         Debt recovery management (non-payroll).
        Operations Branch       Handling of public money (banking, receipting payments etc).
                                Debt reports including aged analysis.
        Treasury, Tax and       Review of written off debts.
        Asset Management
        Team, Financial
        Operations Branch
        Group Financial           Debt recovery management (non-payroll).
        Advisors, Financial
        Services Branch;
        Specialist Financial
        Advisors, COMCAR,
        Comcover,
        Ministerial and
        Parliamentary
        Services Division,
        and Property
        HR Services Branch        Payroll related debts.
                                  Recovery of debts in general from an staff member’s pay.
        Special Claims and        Requests for waiver of debt.
        Land Policy Branch,
        AMPS
        Procurement               This CEI and Operational Guideline.
        Assistance and            Internal Delegation issues.
        Financial Policy
        Team, Financial
        Services Branch
        M&PS HR and               Payroll related debts (for MOP(S) Act employees)
        Specialist Financial
        Advice Team,
        Ministerial and
        Parliamentary
        Services Division




                                              197
NON RECOVERY (WRITE-OFF) OF DEBTS - CHIEF EXECUTIVE
INSTRUCTION 9.2 (V1 - 07/2012)

1.       General

          Section 47 of the FMA Act obliges a Chief Executive to pursue recovery of each debt for
          which they are responsible. However, there are certain circumstances where a Chief
          Executive (or their delegate) can approve the non-recovery of a debt.

          Non-recovery (write off) of a debt is permitted where it would not be economical to pursue
          the recovery of the debt or where the debt is not legally recoverable. A decision to write off a
          debt does not legally extinguish the debt. For example, if the debtor’s circumstances
          change in the future the debt can be reinstated and pursued.
          Instructions – All staff
                 You must ensure that a decision not to pursue the recovery of a debt is approved by
                  your Chief Executive or a delegate under section 47 of the FMA Act.

          Instructions – Staff with a delegation to approve non-recovery of a debt
               You may approve the non-recovery of a debt where:
                      - the non-recovery has been authorised by an Act;
                      - you are satisfied that the debt is not legally recoverable; or
                      - you consider that it is not economical to pursue recovery of the debt.
               You must ensure that a decision not to pursue the recovery of a debt is an efficient,
                  effective, economical and ethical use of resources.
                                                                         Whole of Government Model CEI Provision




2.       Delegations and directions
2.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

         Arrangements                                     Source (including list of delegates)
         Under section 47 of the Act, to decide not to    Financial Management and Accountability
         pursue recovery where satisfied that the debt    (Finance Minister to Finance Secretary)
         is not legally recoverable, or considers it is   Delegation Instrument
         not economical to pursue recovery.
                                                          Internal Financial Delegations Instrument
         Limits apply (refer to the delegation
         instruments)




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NON RECOVERY (WRITE-OFF) OF DEBTS - OPERATIONAL GUIDELINE 9.2
1.       About non-recovery of debts
1.1.1.   The non-recovery (writing-off) of a debt is the response from management to a factual
         situation, rather than the exercise of a discretionary power.

2.       Process guide – writing-off debts
2.1.1.   Staff members should provide sufficient documentation to the delegate to allow them to make
         an informed decision. Such information can include details on the background to the debt,
         nature of the debt, the recovery action already taken, advice from relevant branches (such as
         Legal Services Branch, Accounts Processing Unit, HR Services Branch, or Group/Specialist
         Financial Advisors) within the Department and the reasons for proposing the write off of the
         debt.
2.1.2.   The delegate should (unless extraordinary circumstances exist) make a decision on the
         potential write off of a debt within thirty days of receipt.
2.1.3.   For:
         (a) Departmental debts (excluding for debts administered by the Ministerial and
               Parliamentary Services (M&PS) Division), requests to write off a debt should be made to
               the delegate using the ‘Approval to Write Off Debts Form’ and in consultation with
               undertaken with the Treasury, Taxation and Asset Management Team, Financial
               Operations Branch;
         (b) M&PS administered debts, the writing off on a debt is to be administered by M&PS and
               reported to the relevant delegate and Chief Financial Officer as part of the end of financial
               year reporting process.
2.1.4.   The delegate, within the limits of their authority, can determine that a debt is to be written off
         on the grounds that the debt is:
         (a) unrecoverable after reasonable action has been taken to pursue it;
         (b) non-recovery is authorised by an Act;
         (c) not legally recoverable (after consultation with Legal Services Branch);
         (d) unlikely to be recoverable if the matter were to go to court; or
         (e) uneconomical to pursue, in that:
              (i) the cost to the Commonwealth of the recovery far outweighs the amount of the debt
                   (and therefore leaves the Commonwealth in a financially worse off position); or
              (ii) the debtor is known to be without financial means to settle the debt and there is no
                   prospect that their financial situation will improve in the foreseeable future.
2.1.5.   An amount that is owed by a bankrupt, or company in liquidation, should not been deemed as
         irrecoverable until the bankruptcy terms or liquidation of the company have been finalised.
         Consultation should occur with a Group/Specialist Financial Advisor in such instances.
2.1.6.   Following approval, the relevant area (and where appropriate, the debtor) should be advised
         and copies of the advice retained on file.
2.1.7.   Where approval is given to write-off the debt, the Accounts Processing Unit or
         Group/Specialist Financial Advisor will arrange for the relevant action to occur to process the
         write-off.
2.1.8.   Debts that have been written off should be resubmitted to the delegate on a regular basis to
         facilitate review by the FMA section 47 delegate and the possible recommencement of
         recovery action.
2.1.9.   If a request for write-off of a debt is rejected, debt recovery procedures must recommence
         (CEI 9.1 – Recovery of Debt).




                                                    199
3.       Controls
3.1.1.   Staff members should refer to Operational Guideline 9.1 – Recovery of Debt for an outline of
         the controls applicable to this topic.

4.       Reference topics
4.1.     Key references

          Legislation              Financial Management and Accountability Act 1997

                                   Financial Management and Accountability Regulations 1997

                                   Public Service Act 1999
          CEIs/Operational         2.1 – Approving Spending Proposals and Entering into
          Guidelines                Arrangements
                                   9.1 – Recovery of debts
                                   9.3 – Waiving debts
                                   9.4 – Payment by instalments or deferral of the time for payment
          Forms                    Approval to write off a bad debt form
          Other                    SAP Guidance: Accounts Receivable How to Guide – Write Off
                                    Customer Debt

4.2.     Key contacts
4.2.1.   Staff members should refer Operational Guideline 9.1 – Recovery of Debt for details of key
         contacts for this topic.




                                                  200
WAIVING DEBTS - CHIEF EXECUTIVE INSTRUCTION 9.3 (V1 - 07/2012)

1.       General
1.1.1. A waiver of a debt is a discretionary power with no automatic entitlement. It is available to
         provide a remedy for all Financial Management and Accountability Act 1997 agencies.

          A waiver is a special concession granted to an individual or other body that extinguishes a
          debt or other amount owing to the Commonwealth. This means that the amount owing is
          completely forgiven and can no longer be recovered (even if the debtor’s circumstances
          change in the future). Waivers are usually the result of special circumstances, for example
          where it is considered that the recovery of the debt would be inequitable or cause ongoing
          financial hardship.

          Section 34 (1)(a) of the FMA Act allows the Finance Minister to waive a debt or other
          amount owing to the Commonwealth. This power has been delegated with directions to
          the Chief Executive of Finance, and to the Chief Executives of the Australian Securities
          and Investment Commission and ComSuper for use in limited circumstances.

          Instructions – All staff
           You must refer requests for waiver of a debt to your Chief Executive or a delegate
              with the power to waive the debt under section 34(1)(a) of the FMA Act.

          Instructions – Staff with a delegation to waive debts
           When waiving a debt under the FMA Act, you must comply with the directions in the
              delegation from the Finance Minister or any directions in the delegation from your Chief
              Executive.
                                                                       Whole of Government Model CEI Provision


1.1.2. Any individual, company or other organisation can apply for a waiver of a debt owed to the
         Commonwealth, either for themselves or for an authorised third party.

2.       Reporting
2.1.1.   Special Claims and Land Policy Branch must maintain a register of requests and approvals
         actioned by them.

3.       Delegations and directions
3.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

         Arrangements                                    Source (including list of delegates)
         Under subparagraph 34(1)(a) of the FMA          Financial Management and Accountability
         Act, to waive the Commonwealth’s right to       (Finance Minister to Finance Secretary)
         payment of an amount owing to the               Delegation Instrument
         Commonwealth.
                                                         Internal Financial Delegations Instrument
         Limits apply. (refer to the delegations
         instructions)




                                                   201
WAIVING DEBTS - OPERATIONAL GUIDELINE 9.3
4.       Overview
4.1.1.    Requests relating to waiving debts should be forwarded through the relevant Deputy
          Secretary, with details of their endorsement/non-endorsement of the claim, to the Special
          Claims and Land Policy Branch (SCALPB).
4.1.2.    Requests received by a staff member that do not relate to the Department should be referred
          directly to SCALPB.

5.        Role of the special claims area
5.1.1.    SCALPB has responsibility for coordinating departmental waiver of debt requests and must:
          (a)  in the briefing, ensure that the Minister, or delegate, has sufficient information and
               evidence to make an informed decision on whether to approve or deny any request;
          (b)  notify the relevant area/agency of all decisions; and
          (c)  notify the debtor in writing (following the requirements in the guidance) of the
               decision, including any review rights.

6.        About waiver of debts
6.1.1.    The most common circumstances for the approval of a waiver of a debt is where the particular
          circumstances of the case lead to the conclusion that there is a moral obligation on the
          Commonwealth to waive the recovery of the debt. The circumstances surrounding the matter
          will be special and/or unique.
6.1.2.    The waiver of a debt is a discretionary power and should not be used as a means of
          circumventing legislative provisions or to provide a remedy for particular legislative program
          deficiencies. It is intended to be used to ensure equity in the impact of Government activities
          where special circumstances exist.
6.1.3.    The waiver of amounts owing to the Commonwealth removes the legal existence of the debt
          and it then becomes no longer recoverable at law. The debt is renounced and the collection
          of the debt now or in the future cannot be undertaken.
6.1.4.    If it is determined that a debt is either irrecoverable at law or uneconomic to pursue, the debt
          must not be waived. In such situations, the delegate should consider whether the writing-off
          of the debt under section 47 of the FMA Act is more appropriate (see: CEI 9.2 – Non-recovery
          (write-off) of debts).

7.        Process guide
7.1.      Requests
7.1.1.    Requests for a waiver of a debt are to be made in writing through the ‘Application for Waiver
          of Debt owed to the Government’ form.
7.1.2.    Assessments for the waiver of a debt are to be undertaken in accordance with the guidelines
          in Finance Circular 2009/09 – Discretionary Compensation and Waiver of Debt Mechanisms.
7.1.3.    Staff members should provide sufficient information to the delegate to allow them to make an
          informed decision. This includes details on the background to the debt, nature of the debt, the
          potential financial hardship that may arise from the debtor to repay the debt, alignment of the
          request with Government policy and the perceived merits of the case from a departmental
          perspective.
7.1.4.    Even where financial hardship is demonstrated, a delegate is able to determine that a debt
          will not to be waived.
7.1.5.    The delegate’s decision must be defensible and based on the evidence provided.

7.2.      Financial hardship
7.2.1.    In assessing the financial hardship of a debtor, a delegate should consider:



                                                    202
         (a) supporting documentation (statutory declaration and/or other means) from the debtor to
              demonstrate financial hardship, covering information on ongoing income and expenses
              for the relevant period; and
         (b) an indication by the debtor of proposed repayment levels, including from any future pay
              increases or other payments.
7.2.2.   Where relevant, the debtor’s assets, future income earning capacity, health and family
         circumstances may need to be assessed.

7.3.     Requests under $100,000
7.3.1.   Before a decision is made, where the debt proposed to be waived totals (or may total) less
         than $100,000, the Secretary has been delegated the authority to make a decision on such
         matters. Such a decision should be made only after considering the debt waiver submission
         and all relevant documentation.

7.4.     Requests over $250,000
7.4.1.   Before a decision is made, where the debt proposed to be waived totals (or may total) more
         than $250,000, in accordance with FMA regulation 29(2), an Advisory Committee must
         prepare a report for the Finance Minister to consider.

7.5.     Decisions
7.5.1.   The debtor and relevant area should be advised of the delegate’s decision in writing and
         accordance with any Directions or policy requirements.
7.5.2.   For debts relating to the Department, where approval is given to waive a debt, the Accounts
         Processing Unit or Group/Specialist Financial Advisor will arrange for the relevant action to
         occur to process the waiver.
7.5.3.   For debts relating to the Department where a request is rejected, debt recovery procedures
         must be recommenced in accordance with CEI 9.1 – Recovery of Debts.
7.5.4.   All decisions made by a delegate are to be recorded in writing.

8.       Controls
8.1.1.   Staff members should refer to Operational Guideline 9.1 – Recovery of Debts for details on
         the controls applicable to this topic.

9.       Reference topics
9.1.     Key references

          Legislation             Financial Management and Accountability Act 1997

                                  Financial Management and Accountability Regulations 1997

                               
          CEIs/Operational        2.1 – Approving Spending Proposals and Entering into
          Guidelines               Arrangements
                                  9.1 – Recovery of debts
                                  9.2 – Non-recovery (write-off) of debts
                                  9.4 – Payment by instalments or deferral of the time for payment
          Forms                   Application for Waiver of Debt owed to the Government
          Other                   Finance Minister’s Orders for Financial Reporting (Order 122 –
                                   Compensation and Debt Relief in Special Circumstances)
                                  Waiver of debt guidance on the Finance internet

9.2.     Key contacts
9.2.1.   Staff members are to refer to Operational Guideline 9.1 – Recovery of Debts for details of key
         contacts relating to this topic.



                                                  203
PAYMENT BY INSTALMENTS OR DEFERRAL OF THE TIME FOR PAYMENT –
CHIEF EXECUTIVE INSTRUCTION 9.4 (V1 -07/2012)
1.   General

     Amounts owing to the Commonwealth should generally be paid in full immediately when
     they become due. However, there may be circumstances that warrant allowing a payment to
     be made by instalments or deferring the time for payment.

     Sections 34(1) (c) and (d) of the FMA Act give the Finance Minister the powers to allow
     such arrangements. These powers have been delegated with directions to all Chief
     Executives, who in most cases have sub-delegated them to certain staff members in their
     agencies.


     Instructions – All staff
            You must refer requests to:
                  - allow the payment by instalments of an amount owing to the
                      Commonwealth; or
                  - defer the time for payment of an amount owing to the Commonwealth,
             to your Chief Executive or a delegate with the relevant power under section 34(1)
             (c) or (d) of the FMA Act.


     Instructions – Staff with a delegation to allow payment by instalments or defer the
     time for payment
          When allowing payment by instalments or deferring the time for payment of an
             amount owing to the Commonwealth, you must comply with the directions in the
             delegation from the Finance Minister or any directions in the delegation from your
             Chief Executive.

     Cases of hardship
         When considering cases of claimed hardship, you must require that the debtor
            provide evidence sufficient to satisfy you that it would be unreasonable to require
            repayment of the amount owing other than by instalments or at a deferred date.
                - You must also have regard to the Commonwealth’s interests not being
                    subordinate to other creditors of the same ranking.

     Instalments
          When allowing payment by instalments, you must impose conditions to ensure
             recovery of the amount owing as soon as reasonably practicable, having regard to
             the debtor’s ability to pay.

     Interest
          When allowing payment by instalments or deferring the time for payment, you must
              impose interest on the amount owing at the 90 day bank-accepted bill rate (available
              from the RBA) less 10 basis points.
                  - However, if this would cause undue financial hardship, you may impose a
                      lesser rate of interest, or no interest, provided you record in writing your
                      reasons for doing so.




                                             204
          Information to be given to debtor
               When allowing payment by instalments or deferring the time for payment, you must
                  inform the debtor in writing of:
                       - the amount owing to the Commonwealth;
                       - the date/s when payment is due;
                       - the interest rate (if any);
                       - any other matter you consider relevant; and
                       - the conditions of acceptance contained in the delegation from the Finance
                          Minister.
               You must also obtain written confirmation from the debtor that they accept all of the
                  matters listed above.
                                                                       Whole of Government Model CEI Provision




2.       Postponement of a debt
2.1.1.   Where there is more than one debt owing to the Commonwealth, the payment for debts may
         be postponed to allow them to be paid in order of the priority approved by the delegate.

3.       Delegations and directions
3.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

         Arrangements                                    Source (including list of delegates)
         Under subparagraphs 34(1)(b),(c) and (d) of     Financial Management and Accountability
         the FMA Act, to allow:                          (Finance Minister to Finance Secretary)
              payment by instalments;                   Delegation Instrument
              deferral of recovery; or
                                                         Internal Financial Delegations Instrument
              postponing recovery.

         Limits apply (refer to the delegations
         instruments)




                                                  205
PAYMENT BY INSTALMENTS OR DEFERRAL OF THE TIME FOR PAYMENT -
OPERATIONAL GUIDELINE 9.4
1.       Instalments, deferral or postponement
1.1.1.   Under certain circumstances, it may be appropriate for a debt to be repaid by instalment, be
         deferred for a period or postponed pending the payment of other debts.

2.       Process - MOP(S) Act employees
2.1.1.   Where the debt related to the overpayment of the salary of a MOP(S) Act employee, recovery
         action is to be conducted in accordance with the current Enterprise Agreement for
         Commonwealth Members of Parliament Staff and the FMA legislation as it applies.

3.       Process – Other
3.1.     Payroll related debts
3.1.1.   Where the debt relates to the overpayment of salaries to a staff member, the delegate is to
         have regard to the basic principle that amounts owing to the Commonwealth should be paid in
         full immediately when they become due. In situations where it is not possible or reasonable
         for the amount to immediately be repaid in full, a delegate may consider the repaying of the
         amount by instalments (35 percent of the employee’s gross fortnightly pay may be used by
         the delegate as an appropriate starting point).
3.1.2.   In making a decision about whether to approve the repayment of a debt by instalment, the
         delegate may consider how the salary overpayment occurred, how it was identified, the period
         of time the overpayment occurred, and the period of time required to recover the amount in
         full under an instalment arrangement.
3.1.3.   The delegate is to ordinarily impose interest on instalment arrangements in accordance with
         the Internal Financial Delegations Instrument (with the staff member advised of this in
         correspondence indicating the approval of the instalment arrangement). In considering the
         imposition of interest, the delegate is to consider the debtor’s ability to repay the debt and if
         the imposition of interest will affect this.
3.1.4.   If the delegate approves an instalment arrangement without imposing interest, any
         subsequent Fringe Benefits Tax payable on employee loan fringe benefits is to be recovered
         from the staff member (with the staff member advised of this in correspondence indicating the
         approval of an instalment arrangement). Further information on Fringe Benefits Tax is
         available from the Tax Accountant, Financial Operations Branch and CEI 6.4 – Taxation
         obligations.
3.1.5.   If a repayment by instalment is approved, the delegate is to impose conditions ensuring that
         the Commonwealth recovers the amount as soon as is reasonably practicable, considering
         the debtor’s ability to repay the amount.
3.1.6.   If a repayment arrangement extends over a lengthy period of time, the arrangement is to be
         regularly reviewed to determine if a higher rate of instalment should be sought.

3.2.     Requests to make payments by instalments, deferral or postponement (including non-
         standard payroll instalments)
3.2.1.   Requests should be made in writing within 14 days of notification of the debt. The debtor
         should outline the option(s) they are seeking and their case supporting the request.
3.2.2.   Requests received from a debtor should be forwarded, where possible, to a delegate within
         three working days.




                                                   206
3.2.3.   Staff members should provide sufficient documentation to the delegate to allow them to make
         an informed decision on whether the repayment option should be approved. Documentation
         can include information on the background to the debt, nature of the debt, the potential
         financial hardship (supported by statutory declaration and/or other means) that may arise from
         the debtor to repay the debt, personal circumstances, alignment of the request with
         Government policy and the perceived merits of the case from a departmental perspective.

3.3.     Consideration
3.3.1.   The delegate should (unless extraordinary circumstances exist) make a decision within thirty
         days of receipt of the request.
3.3.2.   The final decision must be defensible and based on the evidence provided on the debt.
3.3.3.   In considering whether to give approval, the delegate should not allow payment by instalment
         or by deferral/postponement only because the debtor owes money to another party and wants
         to pay that amount first.
3.3.4.   In reviewing a request and considering the documentation provided, the delegate is to
         consider:
         (a)      in respect of financial hardship, whether it is unreasonable to require the debtor to
                  discharge the debt by other than by instalment, deferral or postponement;
         (b)      whether any arrangement entered into is likely to ultimately lead to the full recovery of
                  the outstanding debt;
         (c)      whether the required imposition of interest would cause undue financial hardship and
                  any unusual personal circumstances that may be further aggravated in pursing the
                  debt; and
         (d)      if any lesser rate of interest charges could be reduced.

3.4.     Assessing financial hardship and personal circumstances
3.4.1.   In assessing the financial hardship of a debtor, a delegate should consider:
         (a)      supporting documentation (such as a statutory declaration) from the debtor to
                  demonstrate financial hardship (this may include information on the debtor’s
                  household/ongoing income and expenses for the relevant period); and
         (b)      an indication by the debtor of proposed repayment levels, including from any future
                  pay increases or other payments.
3.4.2.   In assessing the personal circumstances of a debtor, a delegate may consider doctors
         certificates and/or any other medical/specialised advice relating to the debtor.
3.4.3.   Where relevant, the debtor assets, future income earning capacity, health and family
         circumstances may need to be assessed.

3.5.     Application of interest
3.5.1.   In assessing the application of interest to a repayment option, delegates should refer to the
         Directions in the Internal Financial Delegations Instrument, CEI 9.4 – Payment by Instalments
         or Deferral of the Time for Payment, and consult with Legal Services Branch.

3.6.     Decisions
3.6.1.   If a repayment option is approved, the correspondence provided to the debtor should:
         (a) comply with any Directions in the delegation instruments (in particular FMA section 34
               mechanisms);
         (b) any general policies in place;
         (c) inform the debtor that any default in the agreed conditions may result in legal action being
               taken to recover the balance due (in full).
3.6.2.   The debtor should agree to the terms of the repayment in writing.
3.6.3.   Where the request is not approved, advice should be sent to the debtor seeking payment of
         the debt in full by a set date. This should be followed up in accordance with CEI 9.1 –
         Recovery of Debts.


                                                    207
3.6.4.   A copy of all departmental (excluding M&PS) decisions should be provided to the Accounts
         Processing Unit, Financial Operations Branch.
3.6.5.   For M&PS related decisions, a copy of the delegate’s decision is to be kept by the M&PS
         Specialist Financial Advice Team.

3.7.     Monitoring and review
3.7.1.   Where a decision has been made to approve the request for a repayment option, the
         Accounts Processing Unit or Group/Specialist Financial Advisor is to monitor payment(s) to
         ensure the ultimate recovery of the debt.
3.7.2.   Staff members are to ensure that regular reviews are also undertaken as to whether the most
         appropriate repayment option is being conducted. When completing a periodic review, the
         delegate should consider whether a higher rate of instalment is appropriate or earlier
         repayment in the case of deferral or postponement. In all circumstances, any planned
         adjustment to the conditions is to be agreed with the debtor before being implemented.

3.8.     Defaults
3.8.1.   In circumstances where a debtor defaults, prompt action should be taken to determine the
         reason why the default has occurred (through contacting the debtor) and ensuring that all
         reasonable action is taken to recover the full amount of the debt.

4.       Controls
4.1.1.   Staff members should refer to Operational Guideline 9.1 – Recovery of Debts for a list of key
         controls.

5.       Reference topics
5.1.     Key references

          Legislation             Financial Management and Accountability Act 1997

                                  Financial Management and Accountability Regulations 1997

                               
          CEIs/Operational        2.1 – Approving Spending Proposals and Entering into
          Guidelines               Arrangements
                                  9.1 – Recovery of debts
                                  9.2 – Non-recovery (write-off) of debts
                                  9.3 – Waiving debts
          Forms                   Nil.

5.2.     Key contacts
5.2.1.   Staff members are to refer to Operational Guideline 9.1 – Recovery of Debts for details of key
         contacts relating to this topic.




                                                  208
CEI/OG 10 - MANAGING PUBLIC PROPERTY
INTRODUCTION



About this CEI
This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction to
staff members on the proper management of public property, including acquisition, disposal,
custody, use and loss.

What is Public Property?
Section 5 of the FMA Act defines public property as either property in the custody or under the control
of the Commonwealth or any person acting for or on behalf of the Commonwealth in respect custody
or control of the property. This includes leased property and property held by the Commonwealth on
behalf of someone else. Public property also encompasses gifts given to the Commonwealth and its
employees.

Public property can include real property (i.e. land and buildings) and other goods or assets, such as:
         equipment and furniture;
         stationery and office supplies;
         vehicles and fuel;
         clothing and uniforms;
         IT and telecommunications assets;
         intellectual property and other intangible items;
         heritage and cultural assets;
         military equipment;
         shares, bonds, debentures and other securities; and
         accounts and records.

Additional requirements applying to particular types of public property
There are specific legislation and policies that apply to the acquisition, ownership, management and
disposal of particular types of public property. For example, public property which involves land,
buildings and/or public works is subject to the following:
         the Lands Acquisition Act 1989;
         the Public Works Committee Act 1969;
         the Australian Government Property Ownership Framework;
         the Commonwealth Property Management Framework; and
         the Commonwealth Property Disposals Policy.
See http://www.finance.gov.au/property/index.html for further information.
                                                                       Whole of Government Model CEI Provision




Instances of Non Compliance

All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).




                                                  209
ACQUIRING PUBLIC PROPERTY (INCORPORATING ACCEPTING GIFTS AND
BENEFITS) - CHIEF EXECUTIVE INSTRUCTION 10.1 (V1 – 07/2012)

1.       General

          Agencies acquire or come to hold public property in a number of ways, such as procuring
          the property (by lease or purchase), being given the property as a gift or donation, finding
          the property on Commonwealth premises or through compulsory acquisition of the
          property.

          Acquisition of property under specific legislation, such as the acquisition of any interest in
          real property by the Commonwealth under the Lands Acquisition Act 1989, is subject to the
          provisions of that legislation.

          INSTRUCTIONS – Staff responsible for procuring public property

          When procuring public property, you must:
              act in an efficient, effective, economical and ethical manner that is not inconsistent
                with the policies of the Commonwealth;
              comply with the requirements of FMA Regulations 7-12 when committing to spend
                public money (see CEI - Committing to Spend Public Money); and
              act in accordance with the CPGs (see CEI - Procurement).
                                                                        Whole of Government Model CEI Provision


1.1.1.   Assets held by the Department, regardless of how they are obtained, should be clearly
         identifiable as departmental property. Where possible, stickers are to be attached to assets
         identifying them as property of the Department.
1.1.2.   All physical and intangible non-current assets with a value of $5,000 (excl. GST) or more are
         to be identified on the Departmental Asset Register. Items of a lesser value, that are
         classified as portable and attractive should be managed through each branch’s/operational
         area’s ‘Portable and Attractive Items Registers’.
1.1.3.   All vehicle leasing and fleet management services are to be sourced under the Whole of
         Australian Government arrangements (currently known as the Fleet Monitoring Body
         arrangements).

2.       Finding property on Commonwealth premises

          Property found on Commonwealth premises must be dealt with in accordance with
          FMA Regulation 23. The same is true of property found in an aircraft, vessel, vehicle,
          container or receptacle that is under the control of the Commonwealth.

          INSTRUCTIONS – Staff who find property on Commonwealth premises



                 You are responsible for the security of any property that you find on
                  Commonwealth premises or in other containers and vehicles that are under the
                  control of the Commonwealth.
                       - You must take reasonable steps to safeguard any found property from loss.
                 You must not misuse or improperly dispose of any found property (see
                  instructions under “Disposing of Property Found on Commonwealth Premises” in
                  this CEI).
                                                                        Whole of Government Model CEI Provision




                                                  210
2.1.1.   Any suspicious items found on Commonwealth premises under the Department’s
         responsibility should not be touched and should be reported immediately to the Security
         Team, Business Services Branch or, in the case of State or Electorate Offices, the relevant
         State Manager/Supervisor.
2.1.2.   For other items that do not need to be disposed of immediately (ie: live plants or animals,
         perishable goods, or articles that are, or could be, dangerous or noxious), where the owner is
         not located within one week, should be handed to the Security Team (this may be through
         Reception staff) or relevant State Manager/Supervisor for management and recording in the
         ‘Register of Property Found on Commonwealth Premises’.

3.       Receiving gifts and benefits

          Staff members, in the course of their work, may be offered gifts such as souvenirs, bottles
          of wine and personal items, or benefits, such as sponsored travel, hospitality,
          accommodation or entertainment.

          Generally, staff members should not accept gifts or benefits in the course of their work.
          However, there may be circumstances where it is appropriate to accept a gift or benefit. For
          example, where refusal could cause cultural offence or where attendance at an event is an
          important means of developing and maintaining relationships with key stakeholders. Staff
          members should carefully consider the appropriateness of a gift or benefit, before accepting
          or rejecting it.

          Gifts provided to staff in the course of their work immediately become public property when
          received.

          INSTRUCTIONS – all staff



                 You must not ask for, or encourage, the giving of gifts to yourself or other staff
                  members.
                 You must not accept a gift of money (except in exceptional circumstances).
                 You must not accept a gift or benefit which influences, or could be perceived to
                  influence, your decision or action on a particular matter.
                 If you decide to accept a gift or benefit, your decision must be defensible and able to
                  withstand public scrutiny. You should have regard to the APS Values and Code of
                  Conduct in deciding whether to accept a gift.
                                                                         Whole of Government Model CEI Provision


3.1.1.   Business Groups are to maintain a ‘Register of Gifts and Benefits’ documenting offers and/or
         acceptance of any gifts or benefits. In the case of the Social Club, the Register should be
         maintained by the Social Club President.
3.1.2.   Where possible, retention of a gift or acceptance of a benefit (other than minor promotional
         items), should only occur with the permission of an Approver (as outlined in the Delegations
         and Directions of this CEI). If you receive a gift or benefit before being able to seek approval
         you should notify the Approver as soon as possible after the event.
3.1.3.   Any gift or benefit received by a family member as a result of their association with you (as a
         staff member) should be managed in accordance with this CEI and Operational Guideline.
3.1.4.   In situations where it would be offensive to decline a gift of money (ie: currency), you may
         accept the money, passing it promptly with an explanatory statement to either the Accounts
         Processing Unit, Financial Operations Branch or through the relevant State
         Manager/Supervisor, to the Specialist Financial Advisor, Ministerial and Parliamentary




                                                   211
         Services (M&PS) Division/COMCAR, for depositing into an official bank account as public
         money.

4.       Delegations and directions
4.1.1.   FMA regulations 7, 9 and 10, and section 44 of the FMA Act may apply to the acquisition of
         public property. Where applicable, you should refer to the relevant delegation instrument
         and/or legislation to confirm the overarching conditions relating to each.
4.1.2.   All documentation should be filed with the Register of Gifts and Benefits.
4.1.3.   Excluding MOP(S) Act employees, the following applies to retaining gifts and accepting
         benefits.

          Value of Gift or        Approver                            Action
          Benefit (inc of GST)
          Minor promotional          NA                              May be retained.
          products with a
          minimal value (such
          as stationary)
          Up to $50                  First Assistant Secretary for   May be retained/accepted
                                      your area; or                   following declaration to the
                                     Finance Social Club             Approver.
                                      President in respect of
                                      Social Club items.
          Between $50 - $250         First Assistant Secretary for   May be retained/accepted where
                                      your area; or                   the Approver is satisfied that
                                     Social Club President in        there is no conflict of interest
                                      respect of Social Club items.   and retention/acceptance is
          Over $250                  Secretary.                      appropriate and that, in the case
          Received by a              Secretary.                      of a gift, that the item should not
          Deputy Secretary                                            be retained as public property
          Received by the            Chief Financial Officer, who    due to value, historical or other
          Secretary                   will consult with the Chief     reasons.
                                      Audit Executive if required.
                                                                      Where the Approver determines
                                                                      that the recipient should pay a
                                                                      contribution (calculated based
                                                                      on the individual circumstances)
                                                                      towards keeping the gift or
                                                                      accepting a benefit, these funds
                                                                      should be treated as payment of
                                                                      public money (refer CEI 7.1 –
                                                                      Receiving Public Money.

4.1.4.   MOP(S) Act employees should refer to the Specialist Financial Advisor, M&PS for clarification
         on the necessary approvals to retain gifts and accepting benefits.
4.1.5.   Other responsibilities are:

          Position                Responsibilities
          Chief Financial           Ensure the assets of the Department are managed in
          Officer                     accordance with the FMA legislation and other requirements.
          Deputy Secretary          Maintain a ‘Register of Gifts and Benefits’ and related
                                      documentation.
                                    Ensure relevant areas under their responsibility maintain
                                      ‘Portable and Attractive Items Registers’.




                                                 212
Position             Responsibilities
Security Team,         Maintain a ‘Register of Property Found on Commonwealth
Business Services        Premises’.
Branch                 Care, custody and disposal of property (other than money)
                         found on Commonwealth premises.
State Managers,
M&PS Division

State Supervisors,
COMCAR




                                   213
ACQUIRING PUBLIC PROPERTY (INCORPORATING ACCEPTING GIFTS AND
BENEFITS) - OPERATIONAL GUIDELINE 10.1

1.       General
1.1.1.   Where public property is to be procured, including leasing, it should be done so in accordance
         with the Commonwealth Procurement Guidelines and any Whole of Australian Government
         arrangements.

2.       Departmental asset register
2.1.1.   All departmental assets are to be clearly identified as departmental property.
2.1.2.   All physical and intangible non-current assets with a value of $5,000 (excl. GST) or more are
         to be identified on the ‘Departmental Asset Register’.
2.1.3.   A Single Asset Addition/Add Value/Amendment form is to be completed and submitted (as per
         the conditions on the form) if any additions or amendments are required.

3.       Portable and attractive items
3.1.1.   Portable and attractive items include items that:
         (a) are less than the department’s capitalisation threshold of $5,000 (excl. GST); and
         (b) due to their ‘portable and attractive’ nature makes them more susceptible to theft or loss
             and are therefore required to be accounted for via control mechanisms.
3.1.2.   Attachment A lists typical items that are considered to meet this definition.

3.2.     Classification of portable and attractive items
3.2.1.   Other than those items identified at Attachment A, each Business Group, by
         Branch/operational area, may decide on the items they wish to include in their ‘Portable and
         Attractive Items Register’ dependant on their perceived level of risk or the nature of the areas’
         operations. Some items (such as IT related products) may be accounted for elsewhere in the
         Department and therefore may not need to be tracked separately.
3.2.2.   Portable and attractive may be defined by an item’s:
         (a) nature (ie: its relative attractiveness and portability);
         (b) the likelihood of theft or misappropriation of the item;
         (c) the ease with which the item can be converted to personal use;
         (d) the need to maintain control over its issue and safe custody; and
         (e) value.
3.2.3.   Regardless of whether an item valued under $5,000 is regarded as portable and attractive,
         staff members are to handle all public property with due care.

3.3.     Treatment
3.3.1.   Items classified as portable and attractive are to be expensed in the period purchased and
         thus have no write-off value in the event of loss or disposal.
3.3.2.   Items under the capitalisation threshold and not classified by a Branch as portable and
         attractive are to be treated as normal consumable items.

3.4.     Portable and attractive items registers
3.4.1.   Where an item has been classified as portable and attractive by a Branch/operational area it
         must be recorded on their Portable and Attractive Items Register as soon as possible
         following purchase.
3.4.2.   The Portable and Attractive Items Register should be made available to the relevant
         Specialist or Group Financial Advice Team on request for General Ledger reconciliation.




                                                   214
4.       Office fitouts
4.1.1.   Depending on the amount and circumstance, the outlay on an office fitout can be classed as
         either an expense or an asset. If the amount is small and related to restyling an existing
         fitout, all labour and material costs should be automatically expensed (if the existing fitout was
         capitalised, then any further costs that relate to this will need to be added to the existing asset
         and not expensed).
4.1.2.   Expenditures on office fitouts are to be capitalised only when the following criteria are met:
         (a) total expenditure is $5,000 (excl. GST) or more; and
         (b) the purpose is either:
              (i) major fitout in a new or existing tenancy;
              (ii) complete restoration of an occupied building/floor; or
              (iii) substantial redesign of an existing fitout.
4.1.3.   All direct costs of the fitout are to be included, covering:
         (a) architectural drawings;
         (b) all partition and associated materials;
         (c) labour costs; and
         (d) associated trades costs.
4.1.4.   The following outlays are not to be treated as part of the capital cost of a fitout:
         (a) demolition/removal costs associated with removing a former fitout (expensed at time of
               payment); and
         (b) purchases of tables, chairs and other moveable items (expensed as minor items or
               treated as capital assets in their own right, depending on the individual item value).
4.1.5.   Where the project will span a number of monthly accounting periods, a Work in Progress
         account is to be established and all costs initially charged to that account.
4.1.6.   On completion of a fitout project, it will be necessary to:
         (a) determine the total costs;
         (b) complete an Asset Addition Form (or similar) and submit to the Group/Specialist Financial
              Advisor;
         (c) secure approval for the value of the asset addition from the appropriate delegate;
         (d) the Treasury, Taxation and Asset Management Team or M&PS Specialist Financial Team
              to post the entry into the FMIS (which journals the total cost to an appropriate asset
              account, updates the Asset Register and sets the monthly depreciation processing).
4.1.7.   All Work in Progress accounts should be reconciled at each month end, to ensure that any
         project that has been completed is closed off, is capitalised, relevant accounting entries
         undertaken and the Departmental Assets Register is updated, in a timely fashion.

5.       Accepting gifts and benefits
5.1.1.   Prima facie, all gifts offered to staff members (or their families) are public property when
         offered as a result of their connection to the Commonwealth. Depending on the
         circumstances, staff members may accept gifts or benefits on behalf of the Department and in
         some cases may be permitted to retain them.
5.1.2.   The acceptance or offer of gifts or benefits requires careful judgment to ensure there is no
         perception of undue benefit or conflict of interest.
5.1.3.   Staff members are to immediately report to the relevant Deputy Secretary or Social Club
         President (where the Social Club is involved) any attempt to compromise them by the offer of
         gifts, benefits or other forms of inducement. The acceptance of any benefit, in circumstances
         within the definition of a bribe, can be both a breach of the FMA regulations and an offence
         under the Crimes Act 1914.
5.1.4.   The offer or acceptance of minor gifts of a protocol or public relations nature is a customary
         part of commercial and public life. Acceptance of minor gifts made in good faith, with no
         attempt to undermine impartiality or independence, will be generally regarded as an
         acceptable action.



                                                    215
5.1.5.   The timing of offers of gifts or benefit is important. In considering whether a gift or benefit
         may be accepted, staff members, including senior managers, and the Approver should take
         into account:
         (a)    the nature of the Department's general functions;
         (b)    whether the Department is running a tender process; and
         (c)    whether any special relationship exists with the offerer, including:
                (i)    a contractual relationship exists or may exist in the future;
                (ii)   the offerer is in receipt of or seeking Commonwealth assistance;
                (iii)  the offerer’s primary purpose is to lobby Ministers, Members of Parliament,
                       Departments or Agencies; or
                (iv) the Department is in a regulatory relationship with the offerer.
5.1.6.   Gifts or benefits should not be accepted by a staff member or their immediate family if the
         acceptance could, in any way, be construed as an attempt to influence administrative,
         regulatory or contractual decisions, or appear as a conflict of interest.

5.2.     Acceptance of gifts overseas
5.2.1.   The staff member should have regard to local customs relating to acceptance gifts, ensuring
         not to offend or damage international relationships.
5.2.2.   If the gift does not qualify for duty free entry under normal passenger concessions, the set
         customs duties may be paid by the Department.
5.2.3.   Any gifts that do not comply with Australian customs or quarantine requirements should be
         surrendered before re-entry into Australia or on arrival.

5.3.     Inconsequential gifts
5.3.1.   The range of inconsequential gifts which may be accepted include:
         (a) small gifts such as diaries, calendars, inexpensive pens and paper-weights;
         (b) entry to local sporting events on an ad hoc basis and small prizes awarded at public
             events;
         (c) reasonable hospitality for regular social events and Christmas functions; and
         (d) reasonable hospitality associated with business presentations and seminars.
5.3.2.   Care should be exercised, however, when even a minor gift is offered and there are no
         perceived ethical issues.

5.4.     Exempt incidental benefits
5.4.1.   The following types of incidental benefits are exempt from the application of this
         CEI/Operational Guideline and its declaration requirements:
         (a) incidental food and beverages consumed during the course of working lunches and
             dinners including such items as tea, coffee, juices, pastries, sandwiches and pizzas;
         (b) shared taxi fares;
         (c) use of incidental work items such as use of equipment and room facilities; and
         (d) benefits of a similar incidental nature.

5.5.     Declaration and recording of gifts
5.5.1.   A declaration to an Approver should contain the following information:
         (a) a description of the gift or benefit;
         (b) the (proposed) date of the gifting/benefit;
         (c) the name of recipient;
         (d) the name of donor;
         (e) the relationship of the donor/recipient in the context of the Department’s activities (as
             outlined previously);
         (f) the circumstances leading to the gifting/benefit; and
         (g) the value (approximate value, if necessary).



                                                    216
5.5.2.   Where possible declarations should be made prior to receipt or within 7 days of the event.

5.6.     Valuing gifts and benefits
5.6.1.   The value of a gift or benefit should be based on the Recommended Retail Price (either
         similar or same) at the time it is received. Where this is not possible, the value should be
         based as a reasonable estimate (without bias to the Approver limits).

5.7.     Retention, placement or disposal of gifts
5.7.1.   The decision by the Approver to allow a staff member to retain a gift or accept a benefit will
         depend on the value of the gift, an assessment of whether there is any element of significance
         attached to the gift and an assurance that no real or perceived conflict of interest or undue
         influence could arise by its acceptance.
5.7.2.   High value, tangible gifts should usually be retained by the Department. The Approver may
         consider the following alternative courses of action:
         (a) give approval for the gift to be retained or accepted by the staff member who has
              received it;
         (b) approve the retention of the gift by the staff member but request that some contribution to
              the value of the gift be made by them; or
         (c) determine that the gift is a gift of significance or has some particular sensitivities and so
              be retained by the Department.
5.7.3.   Where a determination is made that the Department is to retain a gift, it is to be surrendered
         to the relevant Deputy Secretary or the Secretary’s office, who may elect to pass items to the
         Chief Operating Officer Group for handling.
5.7.4.   Gifts retained should be:
         (a) displayed in departmental offices or foyers;
         (b) provided on loan to the Minister’s offices;
         (c) transferred, along with title, to the Department of the Prime Minister and Cabinet;
         (d) transferred, along with title, to a repository of national collections held by a museum,
              gallery, library, archives, educational or community institution;
         (e) passed to the Social Club for charity fund raising activities;
         (f) gifted under the FMA legislation to a recognised non-profit organisation or charity; or
         (g) disposed of under the FMA legislation in an appropriate manner.
5.7.5.   Items retained by the Department should be recorded in the ‘Portable and Attractive Items
         Register’ or the ‘Asset Register’ (if applicable).
5.7.6.   Decisions and actions on any disposal or on-gifting of a gift of significance need to be fully
         documented.

5.8.     Sponsored travel
5.8.1.   Refer to CEI 2.3 – Official Travel.

5.9.     Items purchased for the purpose of gifting
5.9.1.   Refer to CEI 2.3 – Official Travel and CEI 2.4 – Official Hospitality

6.       Property found on Commonwealth premises
         Note: This excludes Electorate Offices, Commonwealth Parliamentary Offices and
         COMCAR vehicles. Please consult the Specialist Financial Advisor, M&PS or COMCAR
         for details.
6.1.1.   Any suspicious item found should not be touched and should be reported immediately to the
         Security Team, Business Services Branch.
6.1.2.   For other items, where the owner is not located within one week, staff members (this may be
         through Reception staff) should hand the item to the Security Team. On receipt of the
         property, Security is to:



                                                    217
          (a) record details of the goods found in the ‘Register of Property Found on Commonwealth
               Premises’;
          (b) issue a receipt to the staff member who found the goods;
          (c) notify the police, where appropriate; and
          (d) ensure the safe custody of the goods.
6.1.3.   All reasonable efforts should then be taken to trace the owner of the property.
6.1.4.   Any property found should be stored in a safe and secure location.
6.1.5.   In accordance with FMA regulation 23, after three months, the Security Team in consultation
         with the relevant Group Financial Advice Team, Financial Services Branch should dispose of
         the unclaimed property. Disposal should be undertaken in accordance with CEI 10.2 –
         Disposal of Public Property, including Gifting Public Property.

7.       Property found in Electorate Offices, Commonwealth
         Parliamentary Offices or COMCAR vehicles
1.1.1.   Any suspicious item found in Electorate Offices or Commonwealth Parliamentary Offices
         should not be touched and should be reported immediately to the relevant State Manager who
         will comply with required security guidelines related to those properties.
1.1.2.   Any suspicious item found in the operation of a COMCAR vehicle should not be touched and
         should immediately be reported to the Chief Warden (ACT National Office/Depot) or State
         Supervisor who will then assess the situation and report to the Security Team, Business
         Services Branch.
1.1.3.   Any suspicious item found or located in a State Depot is to be reported immediately to the
         State Supervisor who will then assess the situation and report the incident to local authorities.
1.1.4.   For other items, where the owner is not located within one week, staff members should hand
         the item to the State Manager/Supervisor who, on receipt of the property, will:
          (a) record details of the goods found in the ‘Register of Property Found on Commonwealth
               Premises’;
          (b) issue a receipt to the staff member who found the goods;
          (c) notify the police, where appropriate; and
          (d) ensure the safe custody of the goods.
1.1.5.   In accordance with FMA regulation 23, after three months, the State Manager/Supervisor in
         consultation with the Entitlements Manager for the relevant State should dispose of the
         unclaimed property. Disposal should be undertaken in accordance with CEI 10.2 – Disposal
         of Public Property, including Gifting Public Property.

8.       Controls
1.1.6.   The key controls are:
         (a) accountable forms and negotiable instrument registers;
         (b) asset and portable and attractive items registers;
         (c) gifts and benefits registers and approval requirements;
         (d) reconciliation of property received in the Department; and
         (e) internal and external audits.

9.       Reference topics
9.1.     Key references

          Legislation               Financial Management and Accountability Act 1997
                                    Financial Management and Accountability Regulations 1997
                                    Crimes Act 1914
                                    Fringe Benefits Tax Act, 1986




                                                   218
       CEIs/Operational             1.4 - Accounts and Records
       Guidelines                   2.3 – Official Travel
                                    2.4 – Official Hospitality
                                    3 – Procurement
                                    7.1 – Receiving Public Money
                                    10.2 – Disposal of Public Property, including Gifting Public
                                     Property
                                    10.3 - Custody and Use of Public Property
                                    10.4 - Loss and Recovery of Public Property
       Forms/Templates              Departmental Asset Register
                                    Portable and Attractive Items Register
                                    Single Asset Addition/Add Value/Amendment form
                                    Register of Gifts and Benefits
                                    Register of Property Found on Commonwealth Premises
                                    M&PS Asset Templates

9.2.   Key contacts

       Branch                        Contact for Assistance on:
       Procurement                  This CEI and Operational Guideline.
       Assistance and               Internal delegation issues.
       Financial Policy             Procurement processes.
       Team, Financial
       Services Branch
       Group or Specialist              Maintain the Departmental Asset Register and accounting
       Financial Advisor              records.

       Treasury, Taxation
       and Asset
       Management
       Team, Financial
       Operations Branch
       Security Team,               Handling of property found on Commonwealth premises.
       Business Services
       Branch
       Accounts                     Bank money received as a gift (as per CEI 7.1 – Receiving Public
       Processing Unit,              Money).
       Financial
       Operations Branch
       IT Services Branch           Procurement of IT equipment.
                                    List of IT issued products.
       Business Services            Procurement of non-IT office equipment.
       Branch
       Special Claims and           Lands Acquisitions Act, Public Works Committee.
       Land Acquisitions
       Branch




                                                   219
ATTACHMENT A: OPERATIONAL GUIDELINE 10.1 - PORTABLE AND ATTRACTIVE
     ITEMS

Departmental Items that are considered to be Portable and Attractive

           1. Digital Cameras and Recorders

           2. Laptop Computers

           3. Blackberrys or similar PDAs

           4. Projectors

           5. Television

           6. Video/DVD/Audio Equipment



       Note – Specific IT items are tracked by IT Services Branch, COOG in line with security and IT
       maintenance/support policies/requirements.



M&PS Administered Items that are considered to be Portable and Attractive

           1. Digital Cameras and Recorders

           2. Projectors

           3. Television

           4. Video/DVD/Audio Equipment

           5. Blackberrys or similar PDA

           6. Fax Machines

           7. Furniture in addition to normal office
              requirements

           8. Mobile phones

           9. Office machines (such as photocopiers)

           10. Refrigerators (Electorate Office and
               Commonwealth Parliamentary Offices)

           11. Shredders




                                                220
DISPOSING OF PUBLIC PROPERTY (INCLUDING GIFTING OF PUBLIC PROPERTY) -
CHIEF EXECUTIVE INSTRUCTION 10.2 (V1 – 07/2012)

1.       General

          Agencies dispose of public property in a number of ways, such as by sale, gift, trade-in,
          transfer to another Commonwealth entity, destruction, recycling or dumping.

          The Commonwealth’s general policy on the disposal of public property is that, wherever it is
          economical to do so, the property should be sold at market price or transferred (with or
          without payment) to another Commonwealth entity with a need for the property.

          Disposal of property under specific legislation, such as the disposal of any interest in real
          property by the Commonwealth under the Lands Acquisition Act 1989, is subject to the
          provisions of that legislation.

          General Requirements - INSTRUCTIONS – all staff



                 You must not improperly dispose of public property.
                 You must not make a gift of public property, unless it complies with the instructions
                  under “Gifting Public Property” in this CEI.
                 You must not dispose of public property found on Commonwealth premises,
                  except in accordance with the instructions under “Disposing of Property Found on
                  Commonwealth Premises” in this CEI’.
                                                                         Whole of Government Model CEI Provision


2.       Staff responsible for the disposal of public property
2.1.1.   You should actively manage the public property that you are responsible for, including
         seeking approval and arranging for its disposal if it becomes surplus, obsolete or
         unserviceable.
2.1.2.   When using a person outside the Commonwealth to dispose of public property the
         arrangement should address any requirements under section 12 of the FMA Act.
2.1.3.   All decisions and actions relating to the disposal of public property should be documented and
         filed.


          INSTRUCTIONS – Staff responsible for the disposal of public property

                 You must ensure that where economical to do so, public property is disposed of by:
                       - selling the property at market price; or
                       - transferring the property (with or without payment) to another
                           Commonwealth entity with a need for the property.
                 If you cannot sell or transfer the property, any disposal must be an efficient,
                  effective, economical and ethical use of Commonwealth resources.


          INSTRUCTIONS – Staff responsible for the disposal of found property


          Property found on Commonwealth premises must be retained and disposed of in
          accordance with FMA Regulation 23. This extends to property found in an aircraft, vessel,
          vehicle, container or receptacle that is under the control of the Commonwealth.



                                                   221
             You may only dispose of property (other than money) found on Commonwealth
              premises or in other containers or vehicles that are under the control of the
              Commonwealth, if the property is not claimed by its owner within three months from
              the date on which it was found.
                  - However, if the property is live plants or animals, perishable goods, or articles
                     that are, or could be, dangerous or noxious, you may dispose of it at any time.
           You must dispose of the property by sale, unless doing so is impracticable or
              undesirable in the public interest.
     If the property has been disposed of by sale and the previous owner later makes a claim on
     the Commonwealth in respect of the property, you must ensure that the person is paid an
     amount equal to the sale amount less any amounts reasonably spent by the agency for the
     storage, maintenance or disposal of the property.

                                                                     Whole of Government Model CEI Provision


3.   Gifting public property

     Section 43 of the FMA Act sets out the circumstances where a gift of public property may
     be made. This section also provides the Finance Minister with the power to approve a gift
     of public property. This power has been delegated with directions to all agency
     Chief Executives, who in most cases have sub-delegated it to certain agency staff
     members.

     INSTRUCTIONS – All staff

            You must not make a gift of public property unless:
                - the making of the gift is expressly authorised by law;
                - a delegate has given written approval to the gift being made under section
                   43 of the FMA Act; or
                - the property was acquired to be used as a gift.

     INSTRUCTIONS – Staff with a delegation to approve a gift of public property

            When approving a gift of public property, you must comply with the directions in
             the delegation from the Finance Minister or any directions in the delegation from
             your Chief Executive.
            You must have regard to the Commonwealth’s general policy for the disposal of
             public property, as outlined in the delegation from the Finance Minister.
            Despite the Commonwealth’s general policy for the disposal of public property, you
             may approve a gift of public property where the property is:
                   - genuinely surplus to the agency’s requirements and of historical or
                       symbolic significance to the proposed recipient; or
                   - holds other special significance for the proposed recipient and there are
                       compelling reasons to justify its gifting to that recipient.
            You must not approve:
                   - a gift of military firearms;
                   - a gift which is prohibited by law; or
                   - a gift that would create an onerous or undesirable precedent.
            You need to ensure that the grounds on which you approve a gift to a selected
             recipient are publicly defensible and documented.
            You must provide written approval for the gifting of public property.
            You must obtain a reasonable estimate of the value of the property before approving
             it to be gifted.
                   - If this is not possible, you must assign a notional value and record the basis
                       for determining the value of the property.
            If the recipient of a proposed gift is a foreign national, foreign organisation or foreign
             government, you must be satisfied of the appropriateness of the proposed gift before



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                  you approve it (the Department of Foreign Affairs and Trade (DFAT) can assist in
                  determining the appropriateness of proposed gifts to foreign nationals, foreign
                  organisations and foreign governments).
                                                                       Whole of Government Model CEI Provision


3.1.1.   You may make a gift of public property where it was acquired to use as a gift, this includes
         Social Club prizes up to a value of $250 (inc GST), refer subsection 43(c) of the FMA Act and
         CEI 2.4 – Official Hospitality (including Entertainment, Working Lunches and Giving Gifts).
         Where the reason for the gifting lapses (ie: an anticipated visit by a foreign delegate is
         cancelled) and the gift cannot be used in a timely manner for another, similar purpose, the
         item should be treated as public property for the purposes of subsection 43(b) of the FMA Act.

4.       Delegations and directions
4.1.1.   Staff members should also refer to the relevant delegation instrument and legislation to
         confirm the conditions of each arrangement, the extent of the delegation and any limitations
         imposed.

          Arrangements                                Source (including list of delegates)
          Under subsection 12(1) of the FMA Act,      Financial Management and Accountability
          to given a written authorisation for an     (Finance Minister to Finance Secretary)
          agreement or arrangement for the            Delegation Instrument
          receipt, custody or payment of public
                                                      Internal Financial Delegations Instrument
          money by an outsider.

          Limits apply (refer to the delegations
          instrument).
          Under subsection 43(b) of the FMA Act,      Financial Management and Accountability
          to give written approval for a gift of      (Finance Minister to Finance Secretary)
          public property to be made.                 Delegation Instrument

                                                      Internal Financial Delegations Instrument
          Limits apply (refer to the delegations
          instrument).
          Under section 44 of the FMA Act,            Internal Financial Delegations Instrument (see
          promoting efficient, effective,             also Operational Guideline 10.2)
          economical and ethical use of
          Commonwealth resources.

          Limits apply (refer to the delegations
          instrument).
          Under FMA regulation 9, approve             Internal Financial Delegations Instrument (see
          general spending proposals in               also Operational Guideline 10.2)
          accordance with any applicable
          monetary limits.

          Limits apply (refer to the delegations
          instrument).

4.1.2.   Other responsibilities are:

          Position                 Responsibilities
          Chief Financial                Approve the sale of public property to a staff member in
          Officer                      certain circumstances.

          Chief Operating



                                                    223
Officer

First Assistant
Secretary, M&PS
Division




                  224
DISPOSING OF PUBLIC PROPERTY (INCLUDING GIFTING OF PUBLIC PROPERTY) -
OPERATIONAL GUIDELINE 10.2

1.       General
1.1.1.   Public property is not to be given away but can be gifted or donated as per the procedures
         outlined in this Operational Guideline.
1.1.2.   Disposal of assets, and where applicable their subsequent replacement, should be planned
         as part of the budgetary process, particularly for plant and equipment. Significant disposal
         actions should be linked to forward procurement plans.
1.1.3.   The decision to dispose of public property may arise as a result of:
          (a) items being no longer required, due to changed functions or usage patterns;
          (b) items becoming surplus, due to departmental restructuring;
          (c) items held in storage and not being required in the foreseeable future;
          (d) items found to contain hazardous or infectious materials;
          (e) items reaching their optimum re-selling age (to maximise returns); or
          (f) items becoming unserviceable and beyond economic repair.
1.1.4.   Sufficient information should be provided to a delegate to allow them to make a determination
         as to whether the disposal, including gifting, of public property is appropriate.
1.1.5.   General Commonwealth policy is that the most practical and economical means of disposal
         should be used.
1.1.6.   As a standard practice, public property which becomes surplus to one section within the
         Department should, if its condition warrants, be offered to other sections before being
         declared surplus.
1.1.7.   Care should be taken to ensure that public property to be disposed of that holds (or held)
         sensitive information or that is hazardous/pollutant in nature is handled appropriately and the
         method used will withstand public scrutiny. Staff members should seek expert advice if
         needed.
1.1.8.   Property may be disposed of individually or in bulk. Once disposed, property is not to be
         included in any future stocktakes.
1.1.9.   In each case, the delegate approached to approve any of the various disposal methods
         should have delegated authority that reflects the value and the sensitivity of the disposal.

2.       Process guide – disposal of major or strategic assets
2.1.     Approval considerations
2.1.1.   If, after consideration (and, where required, consultation with the Group/Specialist Financial
         Advisor), it becomes apparent that a major or strategic asset is no longer required and could
         potentially be sold, staff members are to research all significant policies relating to the
         property. These include:
         (a) identification of key issues relating to the proposed sale (what is being sold and why,
               ownership restrictions, key stakeholders, any Government constraints/controls, alignment
               with Government policies);
         (b) confirmation that the property can be sold;
         (c) document and secure agreement on the objectives of the sale of the property;
         (d) obtain current, independent market valuation of the property being sold (where
               appropriate);
         (e) prepare forecasts of agency savings for property sale/leaseback proposal;
         (f) implement an appropriate risk management system and establish problem resolutions
               mechanisms for any potential scenario with the proposed sale;
         (g) seek advice and assistance from other relevant policy agencies;
         (h) liaise with the Chief Financial Officer; and
         (i) document all major policy implications and prepare a Ministerial submission.



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2.1.2.   Once sufficient research has been undertaken including the reasons why the property should
         be sold, following endorsement by the Secretary, the submission is to be sent to the Minister.

2.2.     Post approval considerations
2.2.1.   Upon the Minister giving approval to sell a major or strategic asset, staff members may, as
         appropriate, consider:
         (a) confirming funding arrangements;
         (b) the timing of the public sale;
         (c) the method of sale;
         (d) the need for business and legal advisors;
         (e) the communications/advertising strategy;
         (f) how the proceeds will be handled;
         (g) if required tender documentation, evaluation of tenders and due diligence (in accordance
             in accordance with CEI 3 – Procurement and the CPRs);
         (h) seeking approval of the proposed outcome (buyer(s)); and
         (i) conclude the sale (including execution of appropriate documentation and updating of
             financial/accounting records).

3.       Process guide – disposal of other assets (including portable and
         attractive items)
3.1.     Decision making and approval
3.1.1.   Where public property that is classified as a Portable and Attractive Item is proposed to be
         disposed, consultation should initially occur with the Group/Specialist Financial Advisor.
3.1.2.   Any M&PS asset item proposed to be disposed, consultation should occur initially with the
         Specialist Financial Advisor, M&PS.
3.1.3.   A staff member who wishes to dispose of public property should forward a proposal to the
         approver/delegate supporting the request:
          (a) details of the property, including type, location, value, when it was purchased or how it
              became public property;
          (b) confirmation that the Department owns the property (ie. not leased or belonging to
              another agency) and that it may be disposed of;
          (c) reasons for the proposed disposal;
          (d) an assessment of the disposal methods; and
          (e) recommendation(s) on the most preferred disposal method (including how this will be
              undertaken).
3.1.4.   The approver/delegate is to consider:
          (a) the potential market value of the property (based on information such as background to
              the sale of similar items and general market interest);
          (b) other intrinsic value (cultural, heritage, etc);
          (c) location (eg: cost to move property);
          (d) volume (ie: whether the disposal is a once off or potentially bulk in nature);
          (e) trade-in value; and
          (f) environmental considerations (including potential refurbishment, reuse, recycling,
              hazardous or noxious material).
3.1.5.   Approvers/delegates are also required to:
          (a) be satisfied that the disposal will withstand public scrutiny in terms of value for money for
              the Commonwealth as well as on probity and ethical grounds;
          (b) ensure that the disposal obtains the best net outcome for the Commonwealth;
          (c) ensure any proposal for the disposal of assets of cultural or historical significance has
              been referred/agreed to the appropriate government agency;
          (d) ensure documentation of all steps are undertaken and filed; and




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          (e) ensure that the date, disposal method and proceeds from disposal are to be recorded in
              the Departmental Asset Register.
3.1.6.   The Treasury, Taxation and Asset Management Team, Financial Operations Branch, COOG
         or the Group/Specialist Financial Advisors are to provide validation that the property identified
         is appropriate for disposal.
3.1.7.   If any damage to the property has been caused by other than fair wear and tear or accidental
         damage, staff members are to apply section 42 of the FMA Act and provide a report outlining:
          (a) reasons causing the deteriorated condition of the asset;
          (b) a recommendation on repair or disposal; and
          (c) any recommendations on any further action.

3.2.     Preparation of property
3.2.1.   A staff member is to check the property for disposal to ensure that it does not contain any
         unsafe or inappropriate material, including:
          (a) other public property, especially portable and attractive items;
          (b) printed stationery of any kind;
          (c) software;
          (d) departmental information particularly in electronic media or hardcopy records, files and
              papers; and
          (e) hazardous materials.
3.2.2.   The barcode label must be removed once all action has been completed and prior to the
         handover or disposal.

3.3.     Disposal method – sale by tender/public auction/select tender in limited market
3.3.1.   As a general rule, property is to be disposed of through the public tender/auction processes
         where it is economic to do so. This may be through the use of private sector disposal agents.
3.3.2.   If sale by tender/public auction is to be undertaken:
          (a) in-house - the arrangement is to be approved by an SES officer under FMA section 44.
          (b) by persons outside the Commonwealth - the arrangement is to be approved by an SES
               officer in accordance with CEI 2 – Committing to Spend Public Money and, if applicable,
               CEI 8 – Handling of Public Money by Persons outside the Commonwealth.
3.3.3.   An exception to this is where an asset is located in a remote locality (and where there is no
         market for such items) or where the items are purpose built and there is minimal or no market
         demand for them. In these instances, (particularly where high value items are involved), the
         Department may seek valuations to establish a fair price prior to offering them for sale to
         either an interested member of the public or a staff member. The Chief Financial Officer or
         First Assistant Secretary, M&PS Division (for M&PS related assets) should be consulted prior
         to any such offer being made.

3.4.     Disposal method – sale to staff members
3.4.1.   A direct sale of minor assets may be made to a staff member, where:
          (a) the staff member to which the property is retiring or being retrenched, the property is
               owned by this Department and its original value was below $5,000 (excl. GST); or
          (b) the item is surplus and it has a fair, current market value of $250 (inc GST) or less.
3.4.2.   Only where a situation warrants should a full market valuation of the property be
         commissioned.
3.4.3.   The Chief Financial Officer or First Assistant Secretary, M&PS Division (for M&PS related
         items and in consultation with the Chief Financial Officer Division) may approve the sale of
         property to staff, except where it relates to property within their control or a staff member of
         their area. In such cases, approval is to be given by the Chief Operating Officer.
3.4.4.   If property is not surplus or obsolete, it must be returned to the asset pool for re-assignment.




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3.4.5.   In all other instances where property is surplus or obsolete, staff members seeking to
         purchase the property must participate along with other interested parties as a bidder in a
         public auction or tender process (refer: Disposal Method – Sale by Tender/Public Auction).

3.5.     Disposal method – trade-in or swaps of assets
3.5.1.   Trade-ins are common as part of a purchasing transaction and offers may also arise to swap
         property.
3.5.2.   Before approving a trade-in or swap, consideration should be given to whether the
         Commonwealth would be in a better position by transferring the property to another part of the
         Department or sold separately.
3.5.3.   Any arrangement to trade-in or swap should be approved by an SES officer or State Manager
         (for M&PS related items) under FMA regulation 9 with the delegated authority that covers the
         gross value of the purchase transaction or the estimated value of the property being acquired
         in the swap.
3.5.4.   The value given for the trade-in or swap is to be recorded in Departmental Asset Register to
         assist in determining the profit or loss on the sale of the property.

3.6.     Disposal method – transfer to another agency
3.6.1.   Following discussions between Commonwealth agencies, where property is proposed to be
         transferred from one to another, the agency that acquires the property should normally pay for
         the property.
3.6.2.   The standard price of payment is to be the net book value of the property. If the net book
         value of the property does not bear any relationship to the current market value, both
         agencies may agree a market value.
3.6.3.   Where transfer to another agency occurs, there is to be sufficient documentation to evidence
         the transfer and the extent to which the receiving agency is responsible for the future
         maintenance, licensing and management of the property.
3.6.4.   Any arrangement to sell to another agency should be approved by an SES officer under FMA
         section 44 in consultation with the Chief Financial Officer.

3.7.     Disposal method – dump and destroy
3.7.1.   Where an item of property has become worthless (ie: of minimal value to the Department or
         other parties), staff members can seek approval to dispose of the property and write off its
         remaining book value.
3.7.2.   When disposal of the property occurs, staff members are to ensure that the property is either
         destroyed or disposed of safely and document to confirm that this has occurred.
3.7.3.   Where appropriate (ie: complies with security and workplace health and safety requirements)
         staff members may undertake the destruction or disposal as part of their duties.
3.7.4.   Any arrangement to dump or destroy public property to be undertaken in-house should be
         approved by an SES officer under FMA section 44. Where this is to be undertaken by
         persons outside the Commonwealth, the arrangement is to be approved an SES officer in
         accordance with CEI 2 – Committing to Spend Public Money and, if applicable, CEI 8 –
         Handling of Public Money by Persons Outside the Commonwealth.

3.8.     Liability of the Commonwealth
3.8.1.   The Department (and the Commonwealth) generally offers no warranty on the condition of
         any goods being disposed of and this should be clearly identified. The auction catalogues or
         other sales documentation should also clearly specify that the goods are sold ‘ex works’ or ‘as
         is, where is’. Prospective buyers should be given the opportunity to inspect the goods before
         sale time.
3.8.2.   In most cases, it will also be the buyers' responsibility to remove the goods from the sale site.




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3.8.3.   In any situation where the Department wishes to offer a warranty on goods for sale, staff
         members will need to consider all possible, related costs associated with such a warranty.
         The Department should expect an increased sales price, if such a warranty is offered.
3.8.4.   Refer CEI 2.2 – Guarantees, Indemnities, Warranties and other Contingent Liabilities.

3.9.     Proceeds from disposal
3.9.1.   The acceptance of a purchaser’s personal cheque should be discouraged unless prior
         arrangements have been adopted to obtain clearance prior to delivery of the goods to the
         purchaser.
3.9.2.   All proceeds from sales must be collected and banked into an official bank account as soon
         as possible (refer CEI 7 – Managing Public Money and CEI 8 – Handling Public Money by
         Persons Outside the Commonwealth).
3.9.3.   The proceeds should be credited to Proceeds from Sale of Assets. The proceeds from the
         sale of all assets (less commission) are to be credited against the assets in the asset register,
         up to the net book value. A profit or loss on sale of any asset can then be determined.

3.10. Taxation
3.10.1. Sales of used goods are subject to GST if sold by a business. Where a dealer sells the
        goods, the GST on their services will only apply to their commission or margin.
3.10.2. Any GST outlays incurred by the Department, for creditable purposes, may be claimed back
        as Input Tax Credits, through the periodic Business Activity Statement.
3.10.3. Refer to CEI 6.4 – Taxation Obligations.

4.       Process guide – disposal of property found on Commonwealth
         Premises
         Note: This excludes Electorate Offices, Commonwealth Parliamentary Offices or
         COMCAR vehicles. Please consult the Specialist Financial Advisor, M&PS or COMCAR
         for details.
4.1.1.   Staff members can immediately dispose of live plants/animals, perishable goods or articles
         that are or could be dangerous or noxious in conjunction with any applicable legal
         requirements. For all other items, in accordance with FMA regulation 23, property may be
         disposed of after three months if the property is not claimed by its rightful owner.
4.1.2.   To determine whether property is dangerous or noxious, staff members should consult with
         the Security Team Business Services Branch who are to consider any legislation or policies
         applicable at a particular time and whether the property presents a reasonable threat to the
         safety of staff or the general public.
4.1.3.   The disposal of property found on Commonwealth premises is to be undertaken in a manner
         consistent with this CEI and Operational Guideline.
4.1.4.   If the rightful owner seeks to claim the property after it has been sold and the claim is found to
         be legitimate, an FMA regulation 9 delegate may approve payment of an amount equal to the
         sale proceeds less reasonable amounts spent for storage, maintenance and/or disposal.

5.       Process guide – gifting public property
5.1.1.   The proposal to gift, when disposing of public property, needs to be publicly defensible and
         enhance the objectives of the Commonwealth.
5.1.2.   Gifts of public property should only be approved by the delegate in accordance with FMA
         section 43, the Directions in the delegations instruments and CEI 10.2 - Disposing of Public
         Property (Including Gifting of Public Property).
5.1.3.   Records are to be maintained in relation to all decisions relating to gifting public property.
5.1.4.   Where approved, the Department’s Asset Register and accounting records should be updated
         accordingly.




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5.1.5.   Gifts of public property made during the financial year, where they are material, are to be
         reported in the annual financial statements of the Department.

6.       Controls
6.1.1.   Controls include:
         (a) accountable forms and negotiable instrument registers;
         (b) appropriate exercise of delegated authority;
         (c) asset and portable and attractive items registers;
         (d) gifts and benefits registers and approval requirements;
         (e) reconciliation of property received in the Department; and
         (f) internal and external audits.

7.       Reference topics
7.1.     Key references

          Legislation                 Financial Management and Accountability Act 1997
                                      Financial Management and Accountability Regulations 1997
                                      Public Service Act 1999
          CEIs/Operational            3 – Procurement
          Guidelines                  6.4 – Taxation Obligations
                                      8 - Managing Public Money by Persons Outside the
                                       Commonwealth
          Templates/Forms             Asset Disposal Form
                                      Single Asset Disposal/Write-Off Form
                                      Disposal of Minor Property Form
                                      M&PS relevant Forms

7.2.     Key contacts

          Branch                       Contact for Assistance on:
          Procurement                 This CEI and Operational Guideline.
          Assistance and              Internal Delegation issues.
          Financial Policy
          Team
          Group or                        Asset management, including maintenance of Asset Register
          Specialist                    (departmental or M&PS) and accounting records.
          Financial Advisor

          Treasury,
          Taxation and
          Asset
          Management
          Team, Financial
          Operations
          Branch
          Legal Services              Terms of agreement with a purchaser/disposal manager of public
          Branch                       property.




                                                     230
CUSTODY AND USE OF PUBLIC PROPERTY - CHIEF EXECUTIVE INSTRUCTION
10.3 (V3 – 07/2012)

1.       General

          All staff members must ensure the proper use and security of any public property they
          receive or have custody of.

          INSTRUCTIONS – All Staff




                     You must not misuse or improperly dispose of public property.
                     You are responsible for the security of any public property you receive, or have
                      custody of, and must take reasonable steps to safeguard the property from loss.
                     You may only use public property for official purposes, unless permission for private
                      use has been given.
                                                                           Whole of Government Model CEI Provision


2.       Use of public property
2.1.1.   The coincidental private use and removal of public property (such as IT resources and
         telephones) is allowed where it relates to undertaking your duties and/or is consistent with
         any departmental policy issued on the subject.
2.1.2.   If you become aware of the improper use of public property, you should report this in
         accordance with CEI 1.2 – Preventing Fraud.
2.1.3.   If you are involved with the management of real property you are to comply with the
         Commonwealth Property Management Framework and ensure that all required
         documentation (such as management plans and data) is obtained and records kept on file.

3.       Use of Australian Government vehicles (executive and general
         fleet vehicles)
         Note: This excludes the use of Commonwealth vehicles that are designated for use by
         COMCAR or Senators and Members vehicles issued under legislative entitlement.

         Most agencies have Commonwealth vehicles that are owned or leased by the agency to be
         used for official purposes by staff members. This does not include private plated vehicles,
         which are provided as part of a remuneration package, such as those under the Executive
         Vehicle Scheme, where separate arrangements exist.

         Staff members must ensure the proper use and security of any Commonwealth vehicles they
         have custody or control of.

                    You must not drive a Commonwealth vehicle, unless prior agreement has been
                     obtained.
                    When driving a Commonwealth vehicle you must:
                         - hold a valid driver’s licence appropriate for the class of vehicle and country
                             where you are driving; and
                         - comply with all relevant traffic laws, ordinances and regulations, including
                             parking restrictions, of the country where you are driving;




                                                      231
                    You must not drive a Commonwealth vehicle if you are not medically fit to drive or are
                     taking prescribed or non-prescribed drugs that can impair your driving ability.
                    You may only use a Commonwealth vehicle for official purposes, unless permission
                     for private use has been given.
                                                                         Whole of Government Model CEI Provision


3.1.1.   If you are a custodian of an Australian Government vehicle you are responsible for ensuring
         that the vehicle is secured when unattended and servicing requirements are met.
3.1.2.   Private plated or Executive Vehicle Scheme (EVS) vehicles may be driven for private
         purposes by:
         (a) the staff member who has been designated as custodian, including during approved
              absences on full pay leave. Where half pay leave or leave without pay is accessed and
              the leave extends beyond 12 weeks the vehicle should be returned after the first 12
              weeks. Once the car has been returned and appropriate advice is provided to HR
              Services, a staff member on half pay leave will then be entitled to EVS allowance at half
              pay in lieu of the EVS vehicle for as long as they remain on half pay leave;
         (b) licensed immediate family members (spouse/partner, children) of that staff member; or
         (c) any other person approved (in writing) by the Secretary.
3.1.3.   Where possible, EVS vehicles should be made available for official use during standard
         business hours.
3.1.4.   Where the relevant Deputy Secretary gives approval for home garaging of a general fleet
         vehicle, the vehicle must not be used for unauthorised private purposes or for carrying
         unauthorised passengers.
3.1.5.   Where Fringe Benefits Tax is payable for a staff member’s use of an Australian Government
         Vehicle, CEI 6.4 – Taxation Obligations, applies.
3.1.6.   Staff members receiving an EVS allowance who take paid leave will continue to be paid the
         full allowance for the first 12 weeks of leave. For any leave beyond 12 weeks, the entitlement
         to EVS will be determined by the rate of pay of the leave ie: if the leave is taken at half pay,
         the EVS allowance will be paid at the half pay rate. If leave is taken without pay the EVS
         allowance will not be paid. Staff members may seek a variation of this policy by submission to
         the Deputy Secretary, COOG.

4.       Accountable forms

          An accountable form is a form that, once completed, can be exchanged or negotiated for a
          benefit such as money, goods or services. Accountable forms include cheques, credit notes,
          official manual receipts, credit vouchers, and miscellaneous charge orders.

          While Cabcharge vouchers are accountable forms, they are also Commonwealth credit
          vouchers for the purposes of the FMA Act and Regulations. For instructions on using
          Cabcharge vouchers, see CEI - Commonwealth Credit Cards.

          INSTRUCTIONS – All Staff

                     You must ensure the safe custody and control of any accountable forms in your
                      possession.
                                                                            Whole of Government Model CEI Provision




                                                      232
5.       Bonds, debentures and other securities

          Bonds, debentures and other securities are written documents that are evidence of an
          obligation to pay money to fulfil a debt or other obligation. Bonds, debentures and other
          securities are dealt with in section 40 of the FMA Act. “Other securities” in this context
          means other documents similar to bonds and debentures, such as shares. When a
          staff member receives a bond, debenture or other security in the course of their work, it
          immediately becomes public property.
          Instructions – All staff
          If you receive any bonds, debentures or other securities, you must ensure that:
                a receipt is issued for the securities received;
                a register is maintained of all securities received; and
                all reasonable steps are taken to safeguard the securities.
                                                                        Whole of Government Model CEI Provision


5.1.1.   Registration of negotiable instruments (bonds, debentures or other securities) should be
         undertaken in consultation with the Treasury, Taxation and Assets Team, Financial
         Operations Branch and be kept in a safe custody cabinet or lodged at a banking institution.
5.1.2.   Once negotiable instruments are cancelled or no longer required, they should be returned to
         the owners (either by hand or through registered post). An acknowledgment or receipt of the
         returned instrument is required to be retained on file for audit purposes.

6.       Acquiring shares and Commonwealth involvement in a company

          Shares are a type of security to which section 40 of the FMA Act applies. Shares become
          public property when they are acquired by the Commonwealth. Shares may be
          represented by a certificate, but more generally are in electronic form only. Section 39A of
          the FMA Act places a special requirement on Ministers to inform the Parliament of any
          involvement in a company by the Commonwealth or by a body corporate that is, or includes,
          a FMA Act agency.

          INSTRUCTIONS – Staff who become aware of changes to the agency’s involvement in
          a company

          You must ensure that your Minister is advised that he/she must inform the Parliament if your
          agency:
              forms, or participates in forming, a company;
              acquires shares in a company (either by purchase or subscription) or disposes of
                  shares in a company;
              becomes a member of a company or ceases to be a member of a company;
              has its rights attaching to company shares varied; or
              has its rights as a member of a company varied.

                                                                        Whole of Government Model CEI Provision


7.       Delegations and directions
7.1.1.   FMA regulations 7, 9 and 10, and FMA section 44 may apply to the custody and use of public
         property. Where applicable, you should refer to the relevant delegation instrument and/or
         legislation to confirm the overarching conditions relating to each.




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7.1.2.   In addition, the following applies.

          Position                     Responsibility
          Chief Financial Officer        Ensure all public property, including accountable forms,
                                           shares and negotiable instruments received by the
                                           Department, is managed appropriately.
          Chief Information Officer      Manage and promote the proper use of ICT equipment by
                                           the Department.
          Assistant Secretary,           Manage and promote the proper use of Commonwealth
          Business Services                assets by the Department and Client Users (ie: Senators,
          Branch                           Members and MOP(S) Act employees).

          Assistant Secretary,
          Entitlements
          Management Branch,
          M&PS Division

          Assistant Secretary,
          Client Services Branch,
          M&PS Division

          Specialist Financial
          Advisor, M&PS Division




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CUSTODY AND USE OF PUBLIC PROPERTY - OPERATIONAL GUIDELINE 10.3

1.       General
1.1.1.   A staff member or client has custody of public property it is either in their direct possession or
         when they have been formally assigned responsibility (whether for a limited or extended
         period).

1.2.     Maintenance
1.2.1.   Planned maintenance is fundamental to the ongoing process of asset management. As
         deferred maintenance results in either a reduction of the useful life of an asset or accelerated
         decline in productive capacity, staff members and clients are to ensure that maintenance is
         carried out in accordance with any timeframes and/or procedures prescribed by the
         manufacturer or Commonwealth policies.
1.2.2.   Expenditure on maintenance will cover replacement of components, general repairs and
         regular servicing. All such costs are to be treated as operational expenditures and charged to
         ‘Repairs and Maintenance’.

1.3.     Replacement
1.3.1.   Planning for asset replacement should include an examination of the relative costs and
         benefits of retaining existing assets as opposed to purchasing replacement/alternative items.
         The assessment should cover:
          (a) whether the replacement is within entitlement;
          (b) the potential for improving operational efficiencies;
          (c) capabilities of the newer technology;
          (d) capacity requirements;
          (e) maintenance requirements; and
          (f) aspects of component parts replacement.
1.3.2.   Cost/benefit analysis should be undertaken prior to making final decisions when considering
         the replacement of significant assets and/or commencing new capital works. Appropriate
         approval is to be obtained prior to any expenditure occurring.

1.4.     Asset enhancement
1.4.1.   The expenditure on projects that increase the service capacity of an asset is defined as ‘asset
         enhancements’. Increasing the service capacity can involve increasing the life of the asset,
         adding additional facilities to the asset or increasing the capacity of the asset through the
         introduction of new component technology or functionality.
1.4.2.   If the outlays exceed $5,000 (excl. GST) and the remaining useful life of the asset extends
         beyond 12 months, then staff members are to ensure that the expenditure is capitalised.
         Where equipment and machinery upgrades result in a significant revision to the useful life of
         an asset, the rates of depreciation will also need to be reviewed.

2.       Personal issue
2.1.1.   Public property may be issued to staff members and clients where there is a demonstrated
         business need or legislative entitlement. Where an item classified as portable and attractive
         (ie: recorded on the Branch/operational area’s Portable and Attractive Items Register) is
         issued to a staff member or client, appropriate documentation (ie: a Personal Issue Form,
         Minute or email) should be kept at Branch level indicating this.
2.1.2.   All staff members and clients have a duty of care and must ensure public property issued to
         them is used properly and afforded appropriate protection (refer ICT Policy, Chapter 1,
         Acceptable Use Policy).




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2.1.3.   When:
         (a) a staff member separates from the Department (ie. transfer, resignation, retirement,
             termination or long leave) any portable and attractive item held must be returned unless
             separate arrangements have been approved (refer HR Services Cessation Checklist);
         (b) a client’s legislative entitlement ceases, any portable and attractive item held must be
             returned to the Department.

3.       Process - stocktakes
         NOTE: For the stocktake process for M&PS please consult the Specialist Financial
         Advisor, M&PS.
3.1.     General
3.1.1.   The principal aims of stocktaking are to:
         (a) verify that physical resources under the control of the Business Group are in use, are
             being efficiently utilised and are fully accounted for;
         (b) to verify the physical existence and location of all non-current assets;
         (c) to determine items that are surplus to requirements; and
         (d) to reconcile the physical stocktake with the Assets Register listings.
3.1.2.   Stocktakes should be performed, as a minimum, on an annual basis and ensure:
         (a) all asset items are recorded;
         (b) all recorded items are located in the nominated places;
         (c) supporting accounting records are accurate; and
         (d) any obsolete, surplus or damaged assets are identified.
3.1.3.   Stocktakes should cover all the non-current assets and portable and attractive items under
         the custody and control of the Business Group. Where possible, stocktakes should be carried
         out by someone other than the person who normally maintains the Register.
3.1.4.   The procedure for departmental stocktaking is as follows:

          Step    Departmental stocktake Action
          1       The annual stocktake shall be undertaken prior to the end of the financial year.
                  Certain IT equipment is also tracked by the Information Technology Services Branch
                  (ITSB), COOG.
          2       Prior to commencement of the physical stocktake, the Assets Officer shall prepare
                  stocksheets for cross-checking physical assets. Details required are:
                  (a)            description of asset;
                  (b)            brand and model;
                  (c)            asset serial number (if known);
                  (d)            asset barcode;
                  (e)            location;
                  (f)            custody group or staff member; and
                  (g)            the asset number.
          3       The stocktake is to be completed by a physical count.
          4       Details of all located items are to be compared with those listed on the stocksheets.
          5       Where an asset is identified but it has not been listed on the Register, details are to
                  be entered onto the Register if it meets the basic asset criteria (by preparing an
                  asset addition form).
          6       Where discrepancies are discovered, further investigation should be undertaken, to
                  determine if the items are located in another section of the Department.
          7       Where assets are on issue as personal assets, the custodians are to:
                  (a) submit the physical asset for inspection, or
                  (b)      (if not practical) provide written proof of the existence and condition of the
                       said assets.
          8       Where assets are on loan to another department or agency:
                  (a) the assets are to be recalled for inspection, where practicable, or
                  (b)      a written report of the continuing existence and condition of the assets is to
                        be provided by the external agency.
          9       At the completion of the stocktake, each completed stocksheet is to be signed and


                                                  236
          Step    Departmental stocktake Action
                  dated by the stocktaker (or, where multiple individuals are utilised, ‘the stocktakers’).
                  The documents should note that the stocktake was completed by a physical count.
          10      The Assets Officer is to review all completed documents. The completed stocktake
                  should be approved (signed off) by the relevant Specialist or Group Financial
                  Advisor.
                  The Portable and Attractive Items Register can be used to record the stocktake
                  results for portable and attractive items.

3.2.     Unserviceable and obsolete Items Report
3.2.1.   Where a physical stocktake reveals assets that are unserviceable or obsolete, the Report
         Schedule needs to provide the following, additional information:
         (a) full description of the item;
         (b) description of condition;
         (c) purchase cost and valuation;
         (d) asset number; and
         (e) the current location.

3.3.     Discrepancy report
3.3.1.   A Discrepancy Report is to be prepared by the Assets Officer (or Specialist Financial Advisor,
         M&PS Division for M&PS related items), to list all items that are at variance. The process is as
         follows:
         (a) the Assets Officer (or, where applicable, Specialist Financial Advisor, M&PS) shall
               prepare a Statement of Discrepancies Report, listing all identified discrepancies between
               the Assets Register and the physical stocksheets.
         (b) the Assets Officer (or, where applicable, Specialist Financial Advisor, M&PS) shall
               provide the relevant section of the report to each Business Group’s Deputy Secretary
               and the Group/Specialist Financial Advisor (or, where applicable, Specialist Financial
               Advisor, M&PS) for review.
         (c) the Group/Specialist Financial Advisor (or, where applicable, Specialist Financial
               Advisor, M&PS) is to investigate all noted discrepancies and provide a written response
               within 15 working days following provision of the Statement of Discrepancies report.
         (d) an Explanation of Discrepancies is to be prepared to provide a written explanation of
               adjustments and resolutions. All remaining discrepancies are to be listed.
         (e) on receipt of the Explanation of Discrepancies Report from each Business Group, the
               Assets Officer (or, where applicable, Specialist Financial Advisor, M&PS) is to:
              (i) physically check items previously reported as missing but now located;
              (ii) amend the stocktake sheets and the Statement of Discrepancies Report, initialling
                    and dating; and
              (iii) provide a final report to the Chief Financial Officer.

3.4.     Review by Treasury, Taxation and Asset Management Team, Financial Operations
         Branch
3.4.1.   The Team shall review the final Statement of Discrepancies Report, with the following aims in
         mind:
          (a) to identify any systemic weaknesses in asset management procedures;
          (b) to make proposals for improvements in procedures;
          (c) to gain approval for the writing off of lost, obsolete or surplus assets through the
              Group/Specialist Financial Advisors; and
          (d) to initiate the sale of any assets which have been deemed surplus to departmental
              needs.




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3.5.     Register of completed stocktakes
3.5.1.   The Assets Officer (or, where applicable, Specialist Financial Advisor, M&PS) is to maintain a
         Register of Completed Stocktakes on file. This shall contain the following information on each
         stocktake:
          (a) date of stocktake;
          (b) stocktake locations;
          (c) date of cut-off for stock movements;
          (d) deficiencies and discrepancies with action taken; and
          (e) lists of identified unserviceable, obsolete and surplus items, with actions taken.

3.6.     Assessment of penalties
3.6.1.   To determine whether the loss of any assets were the result of negligence or wilful disregard
         of departmental policies, all Statement of Discrepancy Reports shall be reviewed by:
          (a) the Treasury, Taxation and Asset Management Team, Financial Operations Branch in
              consultation with the Office of Chief Audit Executive and/or Legal Services Branch; or
          (b) First Assistant Secretary, M&PS Division (for M&PS related assets) in consultation with
              Legal Services Branch, under the Protocol for Alleged Misuse of Entitlements.
3.6.2.   A recommendation is to be provided to the Chief Financial Officer on whether an offence
         under section 41 of the FMA Act has been committed.

4.       Process – Australian Government vehicles
4.1.     Executive and general fleet vehicle scheme
4.1.1.   The use and custody of a vehicle covered under the EVS is subject to the terms and
         conditions of Department’s Executive Vehicle Scheme Guidelines.
4.1.2.   When staff other than the nominal custodian use a vehicle records of use should (ie. a log
         book) be kept (this includes for Fringe Benefits Tax purposes).

4.2.     Use, maintenance, repairs and insurance
4.2.1.   Information on the maintenance, repairs and insurance claims for vehicles as referenced in
         the Department’s Executive Vehicle Scheme Guidelines should be followed.
4.2.2.   In general, when an Australian Government vehicle is damaged while being used for official
         purposes, action will not be taken against the driver to recover the cost of repairing or
         replacing the vehicle. Exceptions to this are where the driver is convicted of:
         (a)    having been under the influence of a drug or intoxicating liquor, including exceeding the
              prescribed percentage or concentration of alcohol in his/her blood;
         (b)    having refused to submit to, or undergo a breath test or analysis or to provide, or permit
              to be taken, a sample or specimen of his/her blood, breath or urine; or
         (c)    having performed some action to alter or affect, or attempt to alter or affect, the
              concentration of alcohol in his/her blood or the result of a test or analysis of his/her
              breath or blood; and
         (d)    been negligent in his/her operation of the vehicle.
4.2.3.   Departmental fuel cards should be used wherever possible.

4.3.     Accidents and Infringements
4.3.1.   Infringement notices are not to be paid from Departmental funds. The responsibility for the
         payment of infringement notices rests with the responsible driver - irrespective of whether the
         infringement notice was issued while the driver was on official business.
4.3.2.   When an accident occurs, the staff member driving is not to admit liability and is to report the
         incident immediately to Business Services Branch. Drivers are to ensure they comply with
         any traffic acts or regulations, with regards to traffic accidents. Requirements for notifying the
         police vary between States and Territories. A Motor Vehicle Insurance Claim Form should be
         completed (contact Business Services Branch).



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5.       Process – Accountable forms
5.1.     Custody, control and return
5.1.1.   Registers (ie: Cabcharge, cheques etc) are to be maintained by the authorised custodian to
         record all accountable forms in their possession and when the forms are issued and/or
         disposed. Unused accountable forms are to be kept in a locked and secure location.
5.1.2.   Accountable forms are only to be issued to staff members authorised to use them.
5.1.3.   On receipt of an accountable form, staff members should sign an acknowledgment indicating
         receipt and/or that the form has been checked and is consistent with the details on the issue
         voucher. When stocks are to be replenished, the Custodian Official should liaise with the
         relevant coordinating area (ie: Accounts Processing Unit, Financial Operations Branch for
         Cabcharge vouchers).
5.1.4.   Partly completed books/blocks of forms which are no longer required are to be returned to the
         relevant coordinating area or Custodian Official and the Register updated accordingly.
5.1.5.   Registers are to be retained by the Business Group to form part of accounting records.
5.1.6.   Regular audits by the relevant coordinating area should be conducted on the stocks of
         accountable forms against the quantities recorded in the Register.

5.2.   Handover or destruction of accountable forms
5.2.1. Where a staff member takes custody of an accountable form register, a statement should be
       completed and signed by both parties and an independent witness confirming the transfer.
       The transfer documentation (confirming the stocks transferred, the keys/combinations for the
       location of the accountable forms and the Register) is to be handled in accordance with the
       Department’s records management procedures.
5.2.2. Accountable forms that are obsolete or damaged are to be destroyed following approval from
       the Chief Financial Officer. Two staff members are to be present and they are to prepare and
       sign a certificate confirming the details of destruction. The Register should also be updated
       accordingly.

5.3.     Lost accountable forms
5.3.1.   Where it becomes known that an accountable form is lost, the Custodian official is to
         immediately notify the relevant area in Financial Operations Branch.
5.3.2.   The form(s) should also be promptly cancelled and depending on the nature of the loss ask
         the Office of Chief Audit Executive may be asked to investigate the matter in accordance with
         CEI 1.2 – Fraud Control.
5.3.3.   Where it is determined that the lost form is not able to be recovered, the authorised custodian
         should write off the form.

6.       Process - Negotiable instruments
6.1.     Negotiable instruments
6.1.1.   Negotiable instruments and securities may be accepted as a deposit on a tender, as security
         for the performance of a contract, or for other purposes (such as bonds on leased premises).
         However, if accepted, the Department has trustee obligations in that the adequacy of the
         security accepted should be determined within the procurement process or during contract
         negotiations.
6.1.2.   The acceptance of a negotiable instrument is subject to the following conditions:
          (a) a bond should have attached to it all coupons payable at future dates;
          (b) a fixed deposit or certificate of deposit shall be in the name of the Commonwealth; and
          (c) a bank guarantee or certificate should provide for payment to the Commonwealth (if
               payment is required by the Commonwealth at any time).
6.1.3.   A staff member who receives a negotiable instrument is to ensure the authorised custodian in
         the Business Group is provided with the instrument on the day of receipt or, if not practicable,




                                                   239
         on the next working day. An authorised custodian is generally a staff member who has the
         role of managing the instrument as part of the contracted arrangements.
6.1.4.   An official receipt is to be issued by the Treasury, Taxation and Asset Management Team,
         Financial Operations Branch. The receipt acts as a security measure to protect the interest of
         both the Department and the party lodging the instrument.
6.1.5.   When issuing a receipt, the following details should be included:
          (a) the serial number of the instrument (if stated);
          (b) particulars of any coupons attached to a bond; and
          (c) the nature of any bank undertaking or certificate.
6.1.6.   All instruments in the Department’s possession are to be registered and held in a secure
         location. Following receipt, the particulars of each negotiable instrument must be recorded in
         the Register of Negotiable Instruments and detail:
         (a) the owner of the instrument (including address and telephone number);
         (b) a clear description of the instrument (including any serial numbers shown);
         (c) the value of the instrument;
         (d) information on any attachment to the instrument;
         (e) information on the purpose for which the instrument is held; and
         (f) the date of return of the instrument.
6.1.7.   Hand over of the negotiable instrument from one staff member to another should include:
          (a) the Register of Negotiable Instruments;
          (b) the keys and combinations for safes and strongrooms;
          (c) all negotiable instruments/securities held;
          (d) a statement signed by both parties and an independent witness confirming the transfer.
6.1.8.   A staff member who returns a negotiable instrument can only do so in accordance with the
         terms of the security’s lodgement (ie: terms of the contract), and this must be done by hand or
         registered post. Upon return, the details (such as reason for and date of, return) should be
         noted in the Register of Negotiable Instruments. In addition, an acknowledgement
         (specifically identifying the instrument) is to be obtained from the owner and retained for audit
         purposes. The acknowledgment also acts as a record of the transfer of liability from the
         Department.
6.1.9.   If a negotiable instrument is lost, that loss must immediately be reported to the Office of Chief
         Audit Executive who should investigate the matter in accordance with CEI 1.2 – Fraud
         Control.

6.2.     Interest on securities
6.2.1.   Interest accruing on a security held by the Department generally belongs to the individual who
         lodged the security. In instances where interest accrues and the security has been:
         (a) lodged with a bank for safe custody, instructions must be given to the bank to pay the
              interest (as due) to the owner; or
         (b) retained by a Business Group and the interest is due to the owner, the Department is
              required to either:
              (i) credit the proceeds to Other Trust Moneys account and make a payment (by cheque)
                        to the owner; or
              (ii) if specifically requested, hand the interest coupon directly to the owner or forward it
                        (by registered post) to the owner.
6.2.2.   Upon an interest being paid, an acknowledgement of receipt must be obtained.
6.2.3.   In instances where the interest is retained by the Department, the Treasury, Taxation and
         Asset Management Team, Financial Operations Branch is to ensure that the interest is lodged
         into the appropriate Departmental bank account.




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7.       Controls
7.1.1.   Controls include:
         (a) accountable forms and negotiable instrument registers;
         (b) asset and portable and attractive items registers;
         (c) gifts and benefits registers and approval requirements;
         (d) reconciliation of property received in the Department; and
         (e) internal and external audits.

8.       Reference topics
8.1.     Motor vehicles and Fringe Benefits Tax (FBT) implications
8.1.1.   A motor vehicle fringe benefit arises when a car is owned or leased by the Department and is
         used by a staff member for private purposes (eg: home garaging).
8.1.2.   A car is taken to be made available for private use by a staff member on any day where:
         (a) it is used for private purposes by the staff member; or
         (b) the car is not at departmental premises and the staff member is authorised to use it for
             private purposes.
8.1.3.   As a general rule, travel to and from work is considered to be the private use of a vehicle for
         FBT purposes. In addition, a vehicle garaged at a staff member’s home is to be treated as
         being available for the private use of the staff member, regardless of whether or not the staff
         member has permission to use it privately.
8.1.4.   Where a FBT liability is established, the Department will pay the FBT liability on behalf of
         each staff member. Each Business Group will maintain relevant FBT information on car fringe
         benefits. The grossed up amount will be included in the staff member’s Payment Summary.
8.1.5.   A car, for FBT purposes, is deemed to include:
         (a) motor cars, station wagons, panel vans, utilities, four wheel drives;
         (b) any other goods carrying vehicles with a designated carrying capacity of less than one
             tonne; or
         (c) any other passenger carrying vehicles with a designated carrying capacity of fewer than
             nine occupants.

8.2.     Key references

          Legislation                Financial Management and Accountability Act 1997
                                     Financial Management and Accountability Regulations 1997
                                     Fringe Benefits Tax Act, 1986
                                     Public Service Act 1999
          Finance Circulars          Commonwealth Property Management Framework
          and Guidance               Finance Circular 2011/01 – Commitments to spend public money
                                      (FMA Regulations 7 to 12
          CEIs/Operational          7.3 – Loss and Recovery of Public Money
          Guidelines                6.4 - Taxation Obligations
          Forms                     Departmental Asset Register
                                    Portable and Attractive Items Register
                                    Single Asset Addition/Add Value/Amendment form
                                    Register of Gifts and Benefits
                                    Register of Property Found on Commonwealth Premises
                                    M&PS Asset Templates
                                    Personal Issue Record Form
          Other                     Finance Executive Vehicle Scheme Guidelines April 2012
                                   APSC Executive Vehicle Scheme Guidelines




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8.3.   Key contacts

        Branch                       Contact for Assistance on:
        Procurement                 This CEI and Operational Guideline.
        Assistance and              Internal Delegation issues.
        Financial Policy Team,
        Financial Services
        Branch
        Property Framework          WoAG Property Framework Policies
        Branch, AMPs
        Specialist Financial        M&PS related processes outlined in this CEI and Operational
        Advisor, M&PS                Guideline.
        Division
        Business Services           Management of arrangements of property and Commonwealth
        Branch                       vehicles leased by the Department.

        Specialist Financial
        Advisor, M&PS
        Division
        Treasury, Taxation          Maintain the Departmental Asset Register and accounting records.
        and Asset                   Negotiable instruments.
        Management Team,            Accountable forms.
        Financial Operations
        Branch

        Specialist Financial
        Advisor, M&PS
        Division
        IT Services Branch          IT equipment.
        Business Services           Non-IT office equipment.
        Branch

        Specialist Financial
        Advisor, M&PS
        Division
        National Operations         Use of and issues associated with COMCAR vehicles.
        Manager, COMCAR




                                              242
LOSS AND RECOVERY OF PUBLIC PROPERTY - CHIEF EXECUTIVE INSTRUCTION
10.4 (V1 – 07/2012)

1.       General

          Section 42 of the FMA Act deals with who is responsible for the loss of public property. In
          relation to public property, loss also includes destruction or damage. A staff member can be
          held responsible for a loss of public property, whether or not the property was in their
          nominal custody at the time when it was lost.

          A loss of property may result in a debt owed to the Commonwealth by a staff member or
          Minister. A person’s liability to pay such a debt is not avoided just because they stopped
          working for the agency after the loss occurred. For further information on the management
          of debt see CEI - Managing Debt.

          INSTRUCTIONS – All Staff

                 You are responsible for the security of any public property you receive, or have
                  custody of, and must take reasonable steps to safeguard the property from loss.
                 If a loss of public property occurs whilst the property is in your nominal custody, you
                  will be liable to pay the Commonwealth an amount equal to the loss, unless you
                  took reasonable steps to prevent the loss.
                 If you cause or contribute to a loss of public property by misconduct, or a deliberate
                  or serious disregard for reasonable standards of care, you will be liable to pay the
                  Commonwealth an amount that reflects your share of the responsibility for the loss.
                                                                          Whole of Government Model CEI Provision


1.1.1.   Lost public property or property in the care of the Department or staff members (ie: negotiable
         instruments) must be pursued.
1.1.2.   If you become aware of loss of property, it is to be reported as soon as practicable to your
         supervisor. A copy of the report is also to be provided to the Office of Chief Audit Executive
         and the Security Team, Business Services Branch for appropriate action.

2.       Delegations and Directions
2.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

          Arrangements                                    Source (including list of delegates)
          Under section 47 of the FMA Act, to             Financial Management and Accountability
          pursue recovery of a debt for which the         (Finance Minister to Finance Secretary)
          Chief Executive is responsible or to            Delegation Instrument
          decide not to pursue recovery.
                                                          Internal Financial Delegations Instrument
          Limits apply (refer to the delegations
          instruments)




                                                    243
2.1.2.   While there is no delegation for the loss and recovery of public property (other than debt) the
         following applies.

          Position                Responsibilities
          All staff                Report losses to your supervisor.
          Supervisors                     Ensure recovery is pursued and report losses to the OCAE
                                      for investigation if the loss warrants this.
                                   Notify the staff member (s) involved that they
                                     -               may be liable to pay an amount equal to the loss;
                                          and
                                     -               should provide a report detailing their actions and
                                          claims.
                                   Implement any actions against staff members found to be
                                      negligent or have breached the Code of Conduct.
          Office of Chief Audit           Initiate and investigate reports of losses.
          Executive                       If the loss involves a Deputy Secretary, the Social Club
                                       President or a possible conflict of interest, consult with the
          Security Team,               Independent Chair of the Audit Committee and the Secretary.
          Business Services               Determine and initiate the appropriate course of action
          Branch                       against any staff member found to be negligent.
                                          Takes steps to address in defects in the Department’s
          First Assistant              internal procedures that led or contributed to the loss.
          Secretary, M&PS
          Division
          Chief Financial                Pursue the recovery of debts related to the loss of public
          Officer                      property.

          Specialist Financial
          Advisor, M&PS
          Division
          Group and Specialist           Seek the approval of the appropriate delegate to write off
          Financial Advisors           non-recoverable assets.




                                                   244
LOSS AND RECOVERY OF PUBLIC PROPERTY - OPERATIONAL GUIDELINE 10.4

1.       General
1.1.1.   A staff member or client is considered to have nominal custody if they:
         (a) have taken delivery of the property and have not returned it to the person entitled to
              receive the property on behalf of the Australian Government; and
         (b) signed a written acknowledgment that the property was delivered on the express
              condition that the custodian would, at all times, take strict care of the property.
1.1.2.   The value of the property lost (full or part) may be recovered as compensation from the staff
         member or client who had custody or another staff member if they had contributed to the loss
         by way of misconduct or serious disregard of policies and guidelines (such as, for M&PS
         administered assets, the Protocol of Alleged Misuse of Entitlements).
1.1.3.   Mitigating circumstances are to be taken into account by delegates when liability for any loss
         is reviewed and determined.
1.1.4.   Following a review of the facts, where the loss is found to be legally recoverable, any
         associated debt must be pursued in accordance with section 47 of the FMA Act (refer CEI 7.1
         Receiving Public Money and CEI 9 – Managing Debt).

2.       Process guide – reporting of loss
         Note: This excludes assets administered as legislative entitlements for Senators,
         Members and MOP(S) Act employees. Please consult the Specialist Financial Advisor,
         M&PS for details.
2.1.     Complete report on property lost/stolen/damaged
2.1.1.   Upon becoming aware of the loss of public property, staff members must report the incident to
         their supervisor verbally and follow up using the Lost/Stolen/Damaged Property Report (which
         requires copies to be sent to the Office of Chief Audit Executive (OCAE) and the Security
         Team, Business Services Branch to investigate the loss as warranted).
2.1.2.   Staff members involved may submit any supplementary information in their defence regarding
         the circumstances of the loss.

2.2.     Investigation the loss
2.2.1.   The circumstances surrounding the loss should be reviewed and investigate as appropriate.
2.2.2.   For losses of less than $5,000 (inc GST) that do not appear to involve fraud or other serious
         concerns, OCAE should liaise with the supervisor and agree what action, if any should be
         taken in respect of the staff members involved with the loss.
2.2.3.   Where the loss exceeds $5,000, involves suspected fraud, misconduct, or the nature of the
         loss is considered serious, OCAE, in consultation with the Security Team, should undertake
         investigations and appropriate responses in accordance with FMA section 15, the
         Commonwealth Fraud Control Guidelines and CEI 1.2 – Preventing Fraud. If insufficient
         detail has been provided to the investigator/delegate, a more detailed report should be
         requested from the relevant parties.
2.2.4.   Investigations should include the following:
         (a) determining the extent of the loss or damage;
         (b) determining when and where the event occurred which led to the loss;
         (c) identifying (and documenting) the circumstances under which the loss occurred;
         (d) assessing whether the loss was caused by a mistake, error, default, neglect or fraud by
              any person (regardless of whether or not they are a staff member);
         (e) assess whether there is any evidence of theft, fraud or robbery having occurred; and
         (f) review the Department’s existing systems of internal controls applicable to the loss so as
              to determine any defects and recommend potential remedies.



                                                  245
2.3.     Decision/level of liability
2.3.1.   OCAE or the investigating officer should determine the actual level of liability for each staff
         member involved in the loss of public property. In determining the level of liability, they should
         consider all the facts surrounding the matter so to ensure that liability is a fair, just and
         equitable reflection of the circumstances surrounding the loss.
2.3.2.   The loss of public property due to fraud or misappropriation is recoverable in full. In such
         cases, every effort must be made to obtain recovery as soon as liability has been established.
2.3.3.   If it is agreed that the amount to be recovered from the staff member is less than the actual
         value of the property (at the time of its loss), then formal approval from an FMA section 47
         delegate is required for the partial non-recovery of the ‘debt’.
2.3.4.   If there are mitigating circumstances an FMA section 47 delegate may accept this as sufficient
         defence for the debt to not be pursued. However, in determining whether the staff member’s
         defence is acceptable, they should consider whether the debt would likely to be recoverable
         at law.

2.4.     Recording of losses
2.4.1.   Upon conclusion of the investigation, all losses of public property must be recorded in
         Department’s Register of Losses of Public Property. The details to be included in the
         Register incorporate:
         (a) a description of the item(s) and value of the loss (if more than 1, each loss to be valued
             separately);
         (b) the date of loss;
         (c) the location where the loss occurred/believed to have occurred;
         (d) the staff member(s) involved in the loss;
         (e) any amount recovered from staff member(s) involved in the loss; and
         (f) any amount that has been classified as a debt owing by the staff member(s) or any asset
             that has been classified as a write-off.
2.4.2.   Any debt arising from the loss of public property must be referred to the Chief Financial
         Officer for recovery action.

2.5.     Recovery and/or write off of loss
2.5.1.   Following a decision that a staff member(s) is liable to pay a sum of money (being all or part
         of the value of the lost property), in accordance with subsection 42(1) of the FMA Act, that
         sum of money is a debt legally recoverable by the Commonwealth.
2.5.2.   Recovery can be made by either a cash payment and/or a withholding of a payment due
         (refer to CEI 9 – Managing Debt).
2.5.3.   A staff member’s liability to pay for the loss is not avoided if they stop working for the
         Commonwealth. Every effort is to be made by the Department to ensure that the amount of
         the loss is recovered.

2.6.     Disciplinary action
2.6.1.   The Secretary (or an authorised delegate), may also take action against staff member(s)
         found to be negligent in their duty in accordance with the disciplinary provisions of the Public
         Service Act 1999 and FMA Act. In circumstances where illegal actions are apparent,
         disciplinary action may extend to the laying of criminal charges.
2.6.2.   The obligation to recover the loss from the staff member as a civil debt is separate to, and not
         to be subsumed by, any decision to pursue criminal or disciplinary action against the staff
         member.




                                                   246
2.7.     Assets

2.7.1.   Separate to any debt recovery action, where the loss of public property is in relation to an
         asset and is non-recoverable, the Group or Specialist Financial Advisor of the relevant
         Business Group is to seek approval of the write-off of the loss (refer CEI 10.2 – Disposing of
         Public Property).

2.7.2.   Asset losses must include losses of inventory identified during stock takes.

3.       Controls
3.1.1.   Controls include:
         (a) maintenance of a register of public property (including portable and attractive items);
         (b) accountable forms and negotiable instrument registers;
         (c) regular stocktakes and reconciliation of property received in the Department; and
         (d) internal and external audits.
3.1.2.   Also refer CEI 1.2 – Preventing Fraud.

4.       Reference topics
4.1.     Key references

          Legislation             Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997
                                  Public Service Act 1999 (including APS Code of Conduct)
          Finance Circular        2011/01 – Commitments to spend public money (FMA Regulations
                                   7 to 12)
          CEIs/Operational        9.1 – Recovery of Debts
          Guidelines              10.3 – Custody and Use of Public Property
          Forms                   Lost/Stolen/Damaged Property Report
          Other                   Nil

4.2.     Key contacts

          Branch                   Contact for Assistance on:
          Procurement             This CEI and Operational Guideline.
          Assistance and          Internal Delegation issues.
          Financial Policy
          Team
          First Assistant         M&PS related matters identified in this CEI and Operational
          Secretary, M&PS          Guideline (including alleged misuse of entitlements).
          Division

          Assistant
          Secretary,
          Entitlements
          Management
          Branch, M&PS
          Division

          Specialist
          Financial Advisor,
          M&PS Division




                                                   247
CEI 11 - WORKING WITH OTHER COMMONWEALTH AGENCIES
INTRODUCTION

 About this Chief Executive’s Instruction (CEI)
 This CEI is issued under section 52 of the FMA Act and FMA Regulation 6. It provides instruction
 to staff members on working with other Commonwealth agencies to achieve shared objectives.

 Working with other Commonwealth agencies
 On a day-to-day basis, staff members from different Commonwealth agencies work collaboratively
 to undertake a number of activities, including the delivery of government services, the making of
 payments, the formulation of national policies, the implementation of complex reforms and the
 exchange of information and a range of specialist expertise.

 The financial management framework contains a number of mechanisms to facilitate inter-agency
 activities. These mechanisms include:
       one or more agencies accessing an appropriation administered by another agency
           through the use of drawing rights;
       a number of agencies being able to pool separately appropriated money through the use of
           a Special Account; and
       joint contracting, such as one agency entering into a contract on behalf of the
           Commonwealth, where the services can be accessed by other agencies.

 It is important that proper procedures are established to ensure the effective coordination of, and
 accountability for, inter-agency activities. In many cases, a formal inter-agency agreement is an
 important mechanism for establishing and clarifying the way in which agencies work together.
 Chief Executives need to be satisfied that such agreements will allow them to meet their individual
 accountabilities under the financial framework.

 Inter-agency agreements
 Inter-agency agreements are diverse in their purpose, form and content, with agencies tailoring
 each agreement to suit a specific situation and range of requirements. For example, an agreement
 between two agencies for the exchange of data might be represented by a simple Exchange of
 Letters. However, the provision of services, such as IT services may be undertaken through a
 Service Level Agreement, while the respective responsibilities of agencies involved in a cross-
 portfolio reform (e.g. Closing the Gap) may be outlined in an MoU.

 Inter-agency agreements are generally not legally binding, as they are between parts of the same
 legal entity (i.e. the Commonwealth). However, they need to be managed according to sound
 governance principles, including program effectiveness, accountability and transparency. The
 success of such agreements is dependent on effective relationship management and cooperation
 between the parties.
                                                                      Whole of Government Model CEI Provision


Instances of Non-Compliance

All instances of non-compliance with the FMA legislation and these CEIs/Operational Guidelines are
to be reported to the relevant SES manager for inclusion in the periodic Business Group Certificate of
Compliance reporting. Non-compliance with internal requirements, while not externally reportable,
provide an opportunity for remedial action to be taken where needed. Penalties may apply for non-
compliance with FMA legislation (refer: FMA legislation and the Public Service Act 1999).



                                                 248
W ORKING WITH OTHER COMMONWEALTH AGENCIES - CHIEF EXECUTIVE
INSTRUCTION 11 (V1 – 07/2012)

1.       General
1.1.     Policies
1.1.1.   In working with other Commonwealth agencies, you should undertake such arrangements in a
         way that ensures compliance with legislative requirements, the Australian Public Service
         (APS) Code of Conduct and Values, and the Department’s Strategic Plan.

          INSTRUCTIONS – All Staff

                 You must not enter into an arrangement that commits your, or another, agency’s
                  appropriation or future appropriation, unless you have been delegated (under
                  section 53) the authority to do so under section 44 of the FMA Act.
                 When undertaking activities that commit or might commit public money, you must
                  comply with the requirements of FMA Regulations 7-12 (see CEI – Committing to
                  Spend Public Money).
                       - Where multiple agencies agree to jointly cover expenditure under an
                           arrangement, you must ensure that, if required, written agreement under
                           FMA Regulation 10 is obtained for each agency’s appropriation item.
                 When using a Special Account to facilitate inter-agency activities, you must comply
                  with the instructions in the CEI on Special Accounts (see CEI – Managing Public
                  Money).
                 When developing an inter-agency agreement, you should ensure that it clearly
                  articulates:
                       - the objectives of the arrangement, including desired outcomes and
                           timeframes;
                       - the roles and responsibilities of the parties;
                       - the details of the activities, including specifications of services or projects to
                           be undertaken;
                       - resources and timeframe to be applied by parties and financial framework
                           issues;
                       - the approach to identifying and sharing the risks and opportunities involved;
                       - agreed modes of review and evaluation; and
                       - agreed dispute resolution arrangements.
                 You must ensure that an inter-agency agreement addresses accountability
                  requirements, including the requirements in Part 7 of the FMA Act, to enable your
                  Chief Executive to meet their responsibilities under the financial framework.
                                                                         Whole of Government Model CEI Provision


2.       Inter-agency agreements
2.1.     Establishment of inter-agency agreements
2.1.1.   You should:
         (a) where appropriate, use inter-agency agreements and co-ordinated procurement
             principles when working and liaising with other agencies;
         (b) ensure that inter-agency agreements entered into contain appropriate provisions to
             enable the Department to meets its requirements under the financial management
             framework. This includes appropriations, outcomes, performance reporting, financial
             statements and Certificate of Compliance;




                                                   249
          (c) where appropriate, ensure that agreements are structured similar to commercial
              arrangements, with appropriate acknowledgment of its public sector nature;
          (d) ensure inter-agency agreements contain or are supported by documented administrative
              arrangements such as resourcing, payment details, debt recovery, delegations, dispute
              resolution, drawing rights, special accounts and other FMA legislative requirements; and
          (e) ensure that inter-agency agreements do not commence operation until such a time when
              the agreement has been signed by the delegate(s) from the relevant agencies.
2.1.2.   Prior to inter-agency agreements being entered into by the Department, you are to ensure
         that the Secretary has been notified (and where required, provides the approval).

2.2.     Management of agreements
2.2.1.   You are to work actively throughout the life of the agreement to ensure the parties fulfil their
         obligations and report (in a timely manner) to management on all matters relating to the
         agreement.

2.3.     Coordinated procurement contracting
2.3.1.   Coordinated procurement contracting involves establishing whole of Australian Government
         arrangements for goods and services to maximise market benefits and deliver efficiencies
         and savings. Staff members should consider the information available on the Department’s
         website to determine whether goods or services are suitable for a coordinated procurement
         contract and the process required to be undertaken. In addition, information can also be
         obtained about coordinated procurement options currently available.

2.4.     National Collaboration Framework
2.4.1.   The National Collaboration Framework (NCF) can be used for any intra or cross-jurisdictional
         project which would typically use a memorandum of understanding. If the NCF is utilised by
         the Department, you should consider the policies, processes and tools (available on the
         Department’s website).

3.       Delegations and directions
3.1.1.   You should refer to the following delegation arrangements applicable to this CEI.

         Arrangements                                      Source (including list of delegates)
         Under FMA regulation 10, agree to                 Financial Management and Accountability
         expenditure that might become payable             (Finance Minister to Finance Secretary)
         under an arrangement where there is               Delegation Instrument
         insufficient appropriation.
                                                           Internal Financial Delegations Instrument
         Limits apply (refer to the delegations
         instrument).
         Under FMA regulation 9, approve general           Internal Financial Delegations Instrument
         spending proposals in accordance with any
         applicable monetary limits.

         Limits apply (refer to the delegations
         instrument).
         Under FMA section 44, enter into or vary          Internal Financial Delegations Instrument
         directions in a way that promotes the proper
         use of Commonwealth resources.

         Limits apply (refer to the delegations
         instrument).

4.       Controls
4.1.1.   The key controls in relation to inter-agency activities are:


                                                    250
       (a) financial delegation levels and accreditation;
       (b) the undertaking of periodic reviews to assess the achievement of objectives of
           arrangements with other Commonwealth agencies;
       (c) monitoring of the activity to ensure compliance with the terms of the arrangement,
           including the achievement of milestones;
       (d) reporting requirements (such as performance reporting, Certificate of Compliance,
           financial reporting in accordance with the Finance Minister’s Orders);
       (e) when developing agreements, adherence to the Better Practice Principles in ANAO Audit
           Report: Effective Cross-Agency Agreements; and
       (f) internal and external audits.

5.     Reference topics
5.1.   Key references

        Legislation               Financial Management and Accountability Act 1997
                                  Financial Management and Accountability Regulations 1997
                               
        Finance                    2011/07 - Certificate of Compliance - FMA Act Agencies
        Circulars                  2011/01 – Commitments to Spend Public Money (FMA
                                    Regulations 7 to 12)
                                   2010/02 – Classification of Payments to the States and Territories
                                    and Commonwealth Own-Purpose Expenses
                                   2010/01 – Section 32 of the FMA Act – Transfer of Agency
                                    Functions
                                   2009/07 – Issuing and Exercising Drawing Rights
                                   2009/01 – An Introduction to Special Accounts
                                   2006/07 – Debits to Official Administered Receipts Accounts
                                   2005/13 – Allocation of responsibilities for special appropriations
                                   2004/16 – Appropriation Management: Responsibilities of
                                    Agencies
                                   2004/06 – Appropriations and the Consolidated Revenue Fund
                                   2003/10 – Special Instruction regarding Special Public Money
                                   2003/07 – Agency Banking Framework Guidance Manual
        CEIs/Operational           2 – Committing to Spend Public Money.
        Guidelines                 3 – Procurement.
                                   6 – Making Payments of Public Money.
                                   7 – Managing Public Money.
                                   9 – Managing Debt
                                   10 – Managing Public Property
        Forms                      Nil.
        Other                      ANAO Audit Report: Effective Cross-Agency Agreements
                                   Coordinated procurement
                                   National Collaboration Framework
                                   Finance Strategic Plan 2011-2014

5.2.   Key contacts

        Branch              Contact for Assistance on
        Procurement           This CEI.
        Assistance and        Internal delegations issues.
        Financial Policy      Procurement processes and contracts reporting.
        Team
        Financial                 Special accounts, drawing rights and taxation matters.
        Operations                Debiting of appropriations (ACM) and official bank accounts.



                                                  251
        Branch               Contact for Assistance on
        Branch                 Payment of accounts.
        Financial Services     Appropriations and resourcing.
        Branch
        Financial               Whole of Australian Government arrangements.
        Framework
        Branch
        Legal Services          Drafting of agreements with other Commonwealth agencies.
        Branch
        Collaborative           Use of template agreements developed under the National
        Services Team            Collaboration Framework.
        Coordinated             Questions regarding coordinated procurement.
        Contracts Help
        Desk


There is no Operational Guideline for this topic. Staff members should contact the relevant Branch
                                      for more information.




                                               252
Glossary of Terms
GLOSSARY OF TERMS (v2 – 7/2012)
As outlined in the Model CEIs (Finance Circular 2011/05: Chief Executive’s Instructions (CEIs).).


 Account (in relation to the payment of accounts) can mean an invoice, claim or any legitimate
 request for the payment of moneys made on an agency.

 Accountable forms are forms that, once completed, can be exchanged or negotiated for a benefit
 such as money, goods or services. Accountable forms include items such as Cabcharge
 vouchers, cheques, credit notes, official manual receipts and miscellaneous charge orders (see
 CEI-Managing Public Property).

 Act of grace payment is a payment made to an individual or other body in special
 circumstances. Act of grace payments must be authorised by the Finance Minister or a
 delegate under section 33 of the FMA Act. They may be appropriate where an agency’s conduct
 or Commonwealth legislation or policy has resulted in an unintended, inequitable or inconsistent
 effect. Act of grace payments are used where the main obligation to the applicant is moral, rather
 than legal (see CEI-Making Payments of Public Money).

 Agency is defined in section 5 of the FMA Act to mean:
    (a) a Department of State:
            i.  including persons who are allocated to the Department (for the purposes of this Act)
                by regulations made for the purposes of this paragraph; but
           ii.  not including any part of the Department that is a prescribed Agency;
    (b) a Department of the Parliament, including persons who are allocated to the Department (for
        the purposes of this Act) by regulations made for the purposes of this paragraph;
    (c) a prescribed Agency.

 Agency-specific determination (in relation to FMA Regulation 10) means a determination made
 by the Finance Minister that varies the limits of the delegation from the Finance Minister to Chief
 Executives to address specific circumstances. These determinations are agency specific.

 Allocated official means an outsider who performs a financial task. The outsider becomes an
 allocated official of the FMA Act agency when they are undertaking the financial task. Allocated
 officials are subject to all the requirements of the financial management framework that apply to
 officials, including the FMA legislation, the policies of the Commonwealth and the relevant
 agency’s Chief Executive’s Instructions.

 Amount owing to the Commonwealth is a sum of money which is owing to the Commonwealth
 that is ascertainable and certain (i.e. known or able to be determined objectively) but not necessarily
 due for payment. For example, an amount owing to an agency from a supplier where an invoice
 has been issued, but payment is not due until next month.

 Appropriation means an authority provided by the FMA Act or another Act of the Commonwealth
 Parliament to draw money from the CRF. It restricts cost to the particular purpose and amount




                                                  253
specified in the relevant Act.

                                       Whole of Government Model CEI Provision




                                 254
Approver is defined in FMA Regulation 3 to mean:

        (a) a Minister; or

        (b) a Chief Executive; or

        (c) a person authorised by or under an Act to exercise a function of approving proposals to
            spend public money.

An approver can consider and approve spending proposals under FMA Regulation 9. A person
may also be authorised to approve proposals to spend public money under legislation other than the
FMA Act.

Arrangement is defined in FMA Regulation 3 to mean an arrangement, including a contract or
agreement, under which public money is payable or may become payable, other than:
    (a) an arrangement for:
            i.  the engagement of an employee; or
           ii.  the appointment of a person to a statutory office; or
          iii.  the acquisition of particular goods or services under a general arrangement with the
                supplier of those goods or services, for the purposes of providing a statutory or
                employment entitlement (e.g. Senior Executive Service vehicle scheme); or
    (b) an international agreement governed by international law.
An arrangement includes an arrangement under which public money is, or may become, payable in
the form of a notional payment.

As soon as practicable (in relation to FMA Regulation 12) is intended to provide approvers with a
degree of practical flexibility when recording the terms and/or basis of an approval. An approver is
expected to make a record within available means and resources, while also doing so in a timely
manner. An example of as soon as practicable, could be when an approver arrives back at the
office after verbally approving a spending proposal whilst not in the office. It would be difficult to
show compliance with FMA Regulation 12 if an approval was documented at a time significantly
later than when the approver returned to the office where there had been ample opportunity to
provide the written approval.

ATO is the acronym for the Australian Taxation Office.

Authorisation is a means of devolving authority whereby statutory power is not transferred (i.e. the
power remains with the issuing official). Authorised officials only act for and on behalf of the
person issuing the authorisation – they do not operate in their own right. In performing the specified
task or function, they are required to think and act as though they were the person who gave the
authorisation. The person who gave the authorisation continues to be responsible for the particular
task or function as though he/she actually carried it out and remains accountable for any decisions
and actions in exercising the relevant power.

Authorised investment is defined in section 39 (10) of the FMA Act to mean:
   (a) in relation to the Finance Minister – any of the following investments:
           i.    securities of the Commonwealth or of a State or Territory;
          ii.    securities guaranteed by the Commonwealth, a Sate or a Territory;
         iii.    a deposit with a bank, including a deposit evidenced by a certificate of deposit;
         iv.     any other form of investment prescribed by the regulations; and
   (b) in relation to the Treasurer – any of the following investments:
           i.    securities of the Commonwealth or of a State or Territory;
          ii.    securities guaranteed by the Commonwealth, a Sate or a Territory;
         iii.    a deposit with a bank, including a deposit evidenced by a certificate of deposit;
         iv.     debt instruments issued or guaranteed by the government of a foreign country
                 being debt instruments with an investment grade credit rating
          v.     debt instruments issued or guaranteed by a financial institution whose members



                                                 255
                consist of foreign countries, or of Australia and foreign countries, being debt
                instruments with an investment grade credit rating;
         vi.    debt instruments denominated in Australian currency with an investment grade
                credit rating;
         vii.   any other form of investment prescribed by the regulations.
Bank is defined in section 5 of the FMA Act to mean:
   (a) a person who carries on the business of banking, either in Australia or outside Australia; or
   (b) any other institution:
           i.   that carries on a business in Australia that consists of or includes taking money on
                deposit; and
          ii.   the operations of which are subject to prudential supervision or regulation under a
                law of the Commonwealth, a State or a Territory.

BAS is the acronym for Error! Reference source not found.Error! Reference source not found.

Business Activity Statement (BAS) is the form used to report and pay a number of taxation
obligations, including GST, PAYG instalments, PAYG withholding and FBT instalments. Agencies
must lodge a BAS with the ATO for each tax period.
Cabcharge card see Commonwealth credit card.

Cabcharge voucher see credit voucher.

Cash advance is defined in FMA Regulation 19 to mean public money, in the custody or control of
an official, and held outside an official account, for a purpose of making payments of public
money in cash. This includes amounts held as “petty cash” (see CEI-Managing Public Money).

CDDA Scheme see Scheme for Compensation for Detriment caused by Defective
Administration.

CEIs is the acronym for Error! Reference source not found.Error! Reference source not found.

CFO is the acronym for Chief Financial Officer or Chief Finance Officer.

CGGs is the acronym for the Commonwealth Grant Guidelines.

Charge is the price or cost imposed. It generally relates to the financial transaction of providing a
good and/or service. A charge imposed or to be imposed by an agency may come within the scope
of either the Australian Government’s policy on cost recovery or competitive neutrality.

Charge card is a credit card that authorises the holder to buy goods or services on credit, with
payment in full required at a later date. Examples include MasterCard, Visa and AMEX. Charge
cards issued to the Commonwealth are a form of Commonwealth credit card.

Chief Executive is a generic term for the head of an Agency. It is defined in section 5 of the FMA
Act to mean:
    (a) for a prescribed Agency—the person identified by the regulations as the Chief Executive of
        the Agency; or
    (b) for any other Agency—the person who is the Secretary of the Agency for the purposes of
        the Public Service Act 1999 or the Parliamentary Service Act 1999.

Chief Executive’s Instructions (CEIs) are instructions issued by a Chief Executive under section
52 of the FMA Act and FMA Regulation 6.




                                                256
Coincidental private expenditure (in relation to Commonwealth credit cards) means private
expenditure incurred by an official in direct connection with their work duties. An official may use a
Commonwealth credit card to pay a claim that includes both official and coincidental private
expenditure, only if this has been authorised by the Chief Executive (see CEI-Commonwealth
Credit Cards and Credit Vouchers).

Comcover is the Commonwealth Government’s general insurance fund. All Australian
Government agencies are insured through Comcover. Agencies purchase cover for all normally
insurable risks, with the exception of workers' compensation, which remains the responsibility of the
Australian Government's Comcare.

Comcare is the workers' compensation insurer for the Australian Commonwealth Government,
providing safety, rehabilitation and compensation services to Commonwealth employees (and
employees of the ACT Government) under the auspices of the safety, rehabilitation and
compensation services to Commonwealth employees.
Commonwealth means the Commonwealth of Australia.

Commonwealth credit card is defined in section 60 of the FMA Act to mean a credit card issued
to the Commonwealth to enable the Commonwealth to obtain cash, goods or services on credit.
For the purposes of the FMA legislation, a Commonwealth credit card number is subject to the
same requirements as a Commonwealth credit card. Credit cards and credit vouchers issued to
the Commonwealth are different from personal credit cards or vouchers, as they do not provide the
holder with a revolving line of credit. Money borrowed by the Commonwealth through the use of a
credit card or credit voucher must be paid in full within a specific timeframe (see
CEI-Commonwealth Credit Cards and Credit Vouchers).

Commonwealth Grant Guidelines (CGGs) are issued by the Finance Minister under
FMA Regulation 7A. The CGGs establish the policy framework within which agencies determine
their own specific grants administration processes. All officials performing duties in relation to
grants administration must act in accordance with the CGGs (see CEI-Grants).

Commonwealth premises (for the purposes of FMA Regulation 23) mean all premises owned or
leased by the Commonwealth, or in the care, custody or control of the Commonwealth. This
includes land and buildings, as well as aircraft, vessels, vehicles, containers or receptacles.

Commonwealth Procurement Rules (CPRs) are issued by the Finance Minister under FMA
Regulation 7. The CPRs establish the core procurement policy framework within which agencies
govern and undertake their own procurement. All officials performing duties in relation to
procurement must act in accordance with the CPRs (see CEI-Procurement).

Commonwealth’s external auditor is the Auditor-General.

Competitive neutrality is a policy principle aimed at removing any net advantages that a
government business activity may have over its private sector competitors by virtue of its public
ownership.

Consolidated Revenue Fund (CRF) is established by section 81 of the Constitution and consists
of all revenues and moneys raised or received by the Executive Government of the
Commonwealth. The CRF is self-executing in nature, which means that all money forms part of
the CRF automatically upon receipt by the Commonwealth.




Contingent liability, in the context of FMA Regulations 10 and 10A, means a commitment that may



                                                 257
give rise to a cost as a result of a future event. They often result from indemnities, guarantees,
warranties or other commitments of this type which are included in contracts. Loan guarantees
are specifically dealt with in FMA Regulation 11 (see CEI-Committing to Spend Public Money).

Coordinated procurement contracting arrangements see Coordinated Procurements.

Coordinated Procurements are goods and/or services that the Australian Government has
decided should be procured at the whole-of-government level. Agencies must use Coordinated
Procurement arrangements where they exist, unless an exemption has been granted. See
CEI-Procurement.

Correctly rendered invoice means a valid tax invoice that also includes agency specific
information as defined in the contract, agreement or other arrangement.

Cost recovery is used by agencies to recover some or all of the costs of particular government
activities. The Australian Government’s cost recovery policy encompasses fees and levies related
to the government provision of goods and services to the non-government sectors of the economy.
See CEI-Managing Public Money.

CPRs is the acronym for the Commonwealth Procurement Rules.

Credit card see Commonwealth credit card.

Credit voucher is essentially a paper based credit card that enables the holder to buy goods or
services on credit, with payment in full required at a later date. Credit vouchers generally come with
an attached spending limit. A Cabcharge voucher is an example of a credit voucher (see
CEI-Commonwealth Credit Cards and Credit Vouchers).

CRF is the acronym for Consolidated Revenue Fund.

Debt (for the purposes of the FMA Act) generally means a sum of money owing to the
Commonwealth which is known and not being disputed, due for payment now and capable of being
recovered. For example, a staff member who has been overpaid a salary, or a person who has
been overpaid a social security payment, may owe a debt to the Commonwealth as a result of the
overpayment (see CEI-Managing Debt).

Deed of Release is a document that is signed by a claimant acknowledging that an offer of
compensation has been accepted and that no future claims can be made against the
Commonwealth in relation to the particular claim.

Deed of Standing Offer for the Provision of Whole of Australian Government Travel
Management Services means the Deed between the Commonwealth (represented by Finance)
and the travel management companies under the WoG travel arrangements.
Debtor means an individual or other body who owes an agency money.

Defective administration (in relation to the CDDA Scheme) is defined as:

       a specific and unreasonable lapse in complying with existing administrative procedures; or

       an unreasonable failure to institute appropriate administrative procedures; or

       an unreasonable failure to give to (or for) an applicant, the proper advice that was within the
        official’s power and knowledge to give (or reasonably capable of being obtained by the



                                                 258
        official to give); or

       giving advice to (or for) an application that was, in all circumstances, incorrect or
        ambiguous.

Delegate means an individual who has been given statutory authority, by an instrument of
delegation, to make particular decisions or perform particular functions. A delegate is constrained
by any limitations expressed in the delegation instrument.

Delegation is a statutory procedure permitting a person (the delegator) to entrust his or her
statutory authority to another person (the delegate). Delegates personally hold and posses the
powers and responsibilities that they have been given and are personally accountable for their
decisions and actions in the exercise or performance of the powers and responsibilities that they
have been given. A delegation is distinct from an authorisation, which provides a person with the
capacity to exercise a particular power or function, but only for and on behalf of the person giving
the authorisation.

Detriment (in relation to the CDDA Scheme) means quantifiable financial loss that an applicant has
suffered. There are three types of detriment:

       detriment relating to a personal injury including mental injury (personal injury loss);

       economic detriment that is not related to personal injury (pure economic loss); and

       detriment relating to damage to property.

Drawing rights are the key mechanism by which an agency controls who can access its
appropriations and make payments on its behalf. Drawing rights are required whenever a staff
member or Minister makes a payment of public money, requests the debiting of an appropriation
or debits an appropriation. The requirements for drawing rights are set out in sections 26 and 27 of
the FMA Act.

Enterprise risk management framework generally involves a plan and/or systems designed to
identify potential events that may affect the agency and its activities and manage risks within the
agency’s risk appetite, to provide reasonable assurance regarding the achievement of the agency’s
objectives.
Ex gratia payments enable the Australian Government to deliver financial relief at short notice.
They are used when urgent, unforseen and exceptional circumstances arise and generally only after
full consideration of other available compensation schemes. Ex gratia decisions are always made
by the Prime Minister and/or Cabinet.
FBT is the acronym for Fringe Benefits Tax.

Fee (also known as a fee for service) is a payment for goods or services provided to, or at the
request of, the person providing the goods or services. There is generally a direct relationship
between the cost of delivering the service and the fee itself. A fee may come within the scope of the
Australian Government’s policy on cost recovery.

Finance means the Department of Finance and Deregulation.

Finance Minister means the Minister who administers the FMA Act (see section 5 of the FMA Act).

Finance Minister’s Orders (FMOs) mean the Orders made under section 63 of the FMA Act,
which outline the requirements and guidance for the annual financial statements prepared by the




                                                  259
Chief Executive of an agency.

Financial approver see approver.

Financial framework is the framework that underpins the appropriation, expenditure and use of
money and resources within the Australian Government. The financial framework includes financial
management legislation and policy, delegations and directions, guidelines, performance reporting
guidance, outcome and programs policy guidance and associated governance arrangements for
government entities.

Financial management framework is a subset of the financial framework and is made up of:
       the FMA Act and the Commonwealth Authorities and Companies Act 1997;


       the FMA Regulations;


       the Financial Management and Accountability (Finance Minister to Chief Executives)
        Delegation 2010;


       the FMOs;


       the CGGs;


       the CPRs;


       the FCGs;


       Ministerial determinations and special instructions; and


       other financial management policies of the Commonwealth.

Financial task is defined in FMA Regulation 3:
    (a) means a task or procedure relating to the commitment, spending, management or control of
        public money; and
    (b) does not include a task or procedure of that kind that is performed by an outsider, under an
        agreement or arrangement authorised under subsection 12(1) of the FMA Act.

FMA Act means the Financial Management and Accountability Act 1997.

FMA legislation comprises the FMA Act and the FMA Regulations. The FMA legislation sets out
the law governing the proper use and management of public money and public property. It also
establishes lines of accountability and reporting for FMA Act agency Chief Executives to their
responsible Minister and, in some circumstances, to the Finance Minister.

FMA Regulations means the Financial Management and Accountability Regulations 1997.

FMIS means an agency’s Financial Management Information System.

FMOs is the acronym for the Finance Minister’s Orders.




                                                260
Fraud against the Commonwealth means dishonestly obtaining a benefit, or causing a loss, by
deception or other means. Fraud against the Commonwealth may include actions such as, theft,
accounting fraud, unlawful use of public property, causing a loss or avoiding and/ or creating a
liability, providing false or misleading information and making or using false documents. Fraud can
come from both inside and outside an agency.

Fraud Control Guidelines (the FCGs) are issued by the Minister for Home Affairs under
FMA Regulation 16A. The FCGs establish the policy framework and articulate the Government’s
expectations for effective fraud control for all FMA Act agencies. All officials performing duties in
relation to the control and reporting of fraud must act in accordance with the FCGs.

Fringe benefits are benefits, other than salaries and wages, which are provided to an employee or
an associate of the employee (usually a family member) by an employer or third party arranger. For
example, where a car owned or leased by the Commonwealth is made available to an official for
private use.

Fringe Benefits Tax (FBT) is a tax on fringe benefits provided in respect of employment during
the year of the tax. An agency must report to the ATO on all fringe benefits provided to officials.

Gifting means Commonwealth resources given without payment or condition (see CEI-Managing
Public Property).

Goods and Services Tax (GST) is a broad based tax of 10 per cent on the sale of most goods and
services consumed in Australia. GST is claimable through the submission of Business Activity
Statements to the ATO as input tax credits. FMA Act agencies are notionally liable to pay GST
and account for it to the ATO through the submission of Business Activity Statements.

Grant is defined in FMA Regulation 3A to mean an arrangement for the provision of financial
assistance by the Commonwealth:

    (a) under which public money is to be paid to a recipient other than the Commonwealth;

    (b) which is intended to assist the recipient achieve its goals;

    (c) which is intended to promote 1 or more of the Australian Government’s policy objectives;
        and

    (d) under which the recipient is required to act in accordance with any terms or conditions
        specified in the arrangement.

However, the following arrangements are taken not to be grants:
    (a) the procurement of goods or services by an agency, including the procurement of the
        delivery of a service by a third party on behalf of an agency;
    (b) a gift of public property or services by an agency, including the procurement of the
        delivery of a service by a third party on behalf of an agency;

    (c) a payment of compensation under:

            (i) an act of grace payment; or

            (ii) an arrangement for employment compensation; or




                                                 261
             (iii) a similar arrangement;

    (d) a payment of benefit to a person, including a payment of an entitlement established by
        legislation or by a government program;

    (e) a tax concession or offset;

    (f) an investment or loan of public money;

    (g) financial assistance provided to a State in accordance with section 96 of the Constitution.

    (h) a payment that is made to a State or a Territory that is made for the purposes of the Federal
        Financial Relations Act 2009, including the following:

             (i) General Revenue Assistance;

             (ii) Other General Revenue Assistance;

             (iii) National Specific Purpose Payments;

             (iv) National Partnership Payments;

    (i) a payment that is made for the purposes of the Local Government (Financial Assistance)
        Act 1995;

    (j) a payment that is made for the purposes of the Schools Assistance Act 2008;

    (k) a payment that is made for the purposes of the Higher Education Support Act 2003;

    (l) a payment of assistance for the purposes of Australia’s international development
        assistance program, which is treated by the Commonwealth as official development
        assistance.

Grants administration covers the entire process of granting activity and includes: planning and
design; selection and decision-making; the making of a grant; the management of a funding
agreement; reporting; and review and evaluation. It also covers a situation where another agency
or third party is responsible for the administration of an agency’s granting activity.

GST is the acronym for the Goods and Services Tax.

Guarantee means a promise whereby one party assumes responsibility for the debt, or
performance obligations, of another party should that party default in some way. For example,
where an agency guarantees payment of bank borrowings by a third party. A guarantee may give
rise to a contingent liability.



Hospitality see official hospitality.

Improperly dispose of generally means to dispose of public money or public property in a way



                                                 262
that is not consistent with the provisions of the FMA legislation, including the requirement to
ensure proper use of Commonwealth resources.

Indemnity means a legally binding promise whereby a party undertakes to accept the risk of loss or
damage another party may suffer. For example, where an agency hires a venue to host a
conference it may indemnify the owner of that venue against losses that may be suffered if
attendees damage the venue. An indemnity may give rise to a contingent liability.

Input tax credits are amounts that can be claimed as a refund from the ATO in respect of GST
paid on goods and services acquired in carrying on an enterprise.

Inter-agency agreement is a documented relationship for the provision of services, exchange of
information or other administrative function or support, signed between two or more agencies.
Examples include: a MoU, Exchange of Letters, Business Partnership or a Service Level
Agreement (see CEI-Working with Other Commonwealth Agencies).
Internal audit function is the unit or auditors that are responsible for the delivery of the internal
audit services of an agency.
Legal Services Directions 2005 are directions issued by the Attorney-General under the Judiciary
Act 1903. These directions set out the requirements for Commonwealth legal work.

Letter of comfort means an instrument that is used to facilitate an action or transaction, but is
made with the intention of not giving rise to a legal obligation. Many agencies prohibit the use of
letters of comfort. A letter of comfort may give rise to a contingent liability.

Levy is a form of tax. It is often used to refer to a tax that is imposed on a specific industry or class
of persons, rather than a tax of general application. A levy may come within the scope of the
Australian Government’s policy on cost recovery.

Liability cap is a legally binding commitment whereby a contactor’s liability for damage or loss is
limited to a certain amount.

Loan Guarantee is defined in FMA Regulation 11 to mean a guarantee of the due payment of one
or more of the following:

    (a) the whole of the principal of a loan;

    (b) the whole of the interest payable on a loan;

    (c) a part of the principal of a loan;

    (d) a part of the interest payable on a loan.

Material (for the purposes of FMA Regulation 10A) means that the expenditure is at least $5 million,
if the Finance Minister has not specified another amount in a legislative instrument.

Memorandum of Understanding (MoU) is a written agreement between two or more parties that
defines the working relationship, expectations and responsibilities. MOUs are usually not legally
binding on the parties. They are commonly used for arrangements between Commonwealth
agencies.

Misuse means to use Commonwealth resources (including public money and public property) in
a way that is not efficient, effective, economical or ethical and/or in a way that is inconsistent with
the policies of the Commonwealth.




                                                    263
Minister includes a Presiding Officer of a Parliamentary Department.

Model CEIs means the CEIs, developed by Finance in consultation with other FMA Act agencies,
which state the core requirements of the financial management framework.

Most probable cost (for the purposes of FMA Regulation 10A) means the amount that would most
likely need to be paid if the event to which the contingent liability relates occurred. For example, if
there is a 55% chance that expenditure under the arrangement will be less than $5 million, and a
45% chance that the expenditure will be over $5 million, it is reasonable to assess the most
probable cost as under $5 million. When calculating the most probable cost, the potential proceeds
of insurance must not be taken into account.

MoU is the acronym for Memorandum of Understanding.

Nominal custody of public money


Section 15 of the FMA Act states that a person has nominal custody of public money if:
        (a) the person holds the money by way of a petty cash advance, “change float” or other
            advance; or
        (b) the person has received the money, but has not yet dealt with it as required by
            section 10.

Nominal custody of public property


Section 42 of the FMA Act states that a person (the custodian) has nominal custody of public
property if both of the following conditions are satisfied:
        (a) the custodian has taken delivery of the property and has not returned it to the person
            entitled to receive the property on behalf of the Commonwealth; and
        (b) when the custodian took delivery of the property the custodian signed a written
            acknowledgement that the property was delivered on the express condition that the
            custodian would at all times take strict care of the property.

Nominal custodian means a person who has taken nominal custody of public money or public
property.

Non-bankable currency is defined in FMA Regulation 18 to mean:
    (a) a currency that cannot be banked; or

    (b) a currency the banking of which would, in the opinion of the Chief Executive of the Agency
        by which it is received, involve significant costs or administrative difficulty.

Non-recovery (write off) of a debt is permitted under section 47 of the FMA Act where the Chief
Executive or delegate considers it would not be economical to pursue the recovery of a debt or
where a debt is not legally recoverable. A decision to write off a debt does not legally extinguish the
debt. For example, if the debtor’s circumstances change in the future the debt can be reinstated
and pursued (see CEI-Managing Debt).

Notional payments and receipts

Section 6 of the FMA Act deals with transactions that do not actually involve money leaving the


                                                 264
CRF, because both parties to the transaction are part of the Commonwealth, or acting on behalf of
the Commonwealth. For example, where one FMA Act agency pays another for services, or where
one part of an agency pays another part of that agency. The FMA Act treats these notional
payments and receipts as real payments and receipts and as such, drawing rights are required for
the transaction.

Notional receipts see notional payments and receipts.

Official is defined in section 5 of the FMA Act to mean a person who is in an Agency or is part of
an Agency. This generally includes the Chief Executive, all persons employed on an ongoing or
non-ongoing basis by the agency and any person who performs a financial task on behalf of the
agency. See also staff member.

Official account means a bank account referred to in section 9 of the FMA Act. This represents all
bank accounts of an agency that are opened and maintained by a delegate under section 9 of the
FMA Act. All official accounts are required to have the word “Official” in the title. Public money
must generally be held in official accounts.

Official advance see cash advance.

Official bank account see official account.

OPA is the acronym for Official Public Account.

Official Public Account (OPA) means the group of bank accounts, known as the Official Public
Account Group, the aggregate balance of which represents the daily cash position of the
government.

Official hospitality generally involves the use of public resources to provide hospitality to persons
other than staff members to facilitate the achievement of one or more Commonwealth policy
objectives (see CEI-Committing to Spend Public Money).

Official travel is any travel where the Commonwealth is responsible for any of the direct or indirect
costs associated with that travel (see CEI-Committing to Spend Public Money).

Outsider is defined in section 12 of the FMA Act to mean any person other than the
Commonwealth, an official or a Minister (see CEI-Handling of Public Money by a Person Outside
the Commonwealth).

Overdraft drawing is an arrangement where a bank, at its own discretion, honours a drawing on
an agency’s account when there are insufficient funds in the account to meet the drawing.
Agreements entered into under section 8 of the FMA Act can allow overdraft drawings, as long as
they are repaid within 30 days (see CEI-Managing Public Money).

Overdraft facility is an arrangement for advances set up between an agency and a bank, with a
defined borrowing limit. The bank is obliged to honour payments that put the account into negative
balance, up to the agreed limit. An overdraft facility represents a borrowing on behalf of the
Commonwealth and as such, the use of overdraft facilities is extremely restricted (see
CEI-Managing Public Money).

PAYG is the acronym for Pay As You Go.




                                                 265
Payment see CEI-Making Payments of Public Money.

Payment pending probate relates to an amount which the Commonwealth owes to a person at
the time of their death. FMA Regulation 30 gives the Finance Minister the power to authorise a
payment to a deceased person’s estate, without requiring production of a will or letter of
administration, having regard to the persons who are entitled to the property of the deceased
person under the deceased person’s will or under the law relating to the disposition of the property
of deceased persons (see CEI-Making Payments of Public Money).
Petty cash means money used for small, incidental and one-off expenses, such as emergency
stationery. See cash advance.

Presiding Officer means the President of the Senate or the Speaker of the House of
Representatives.

Procurement encompasses the whole process of purchasing goods and services from suppliers
and other service providers including from other government entities. It encompasses the complete
lifecycle process, commencing when the agency has identified a procurement need through to the
ongoing management of a contract, or disposal of the goods or of the cessation of service (see
CEI-Procurement).

Proper use means efficient, effective, economical and ethical use that is not inconsistent with the
policies of the Commonwealth.

Public money is defined in section 5 of the FMA Act to mean:
    (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 (see CEI-Managing Public Money).

Public property is defined in section 5 of the FMA Act to mean:
    (a) property in the custody or under the control of the Commonwealth; or
    (b) property 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 property;
    including such property that is held on trust for, or otherwise for the benefit of, a person other
    than the Commonwealth (see CEI-Managing Public Property).

RBA is the acronym for the Reserve Bank of Australia.

Reasonable inquiries
What are reasonable inquiries will depend on the nature (e.g. materiality and complexity) and
context of the matter and will require a person to exercise judgement. A person should marshal
sufficient information to make a defensible decision. The primary meaning of “inquiry” is an
investigation into a matter. Accordingly:
    (a) for the purposes of FMA Regulation 9, an approver should investigate whether the
        proposed cost would be a proper use of public money; and
    (b) for the purposes of FMA Regulation 10A, a person should investigate whether:
           (i) the likeliness of the occurrence of the event to which the contingent liability relates
               is remote; and



                                                  266
           (ii) the most probable cost that would need to be made as a result of the event
                occurring would not be material.
The reference to reasonable inquiries indicates that there are limits to the extent to which persons
need to satisfy themselves, but an investigation is still required based on the nature and context of
the matter.

Remote (for the purposes of FMA Regulation 10A) means that there is a probability of less than 5%
that the event will occur.

Scheme for Compensation for Detriment caused by Defective Administration
(CDDA Scheme) is an administrative scheme that allows FMA Act agencies to compensate
individuals or other bodies who have experienced detriment (i.e. quantifiable financial loss) as a
result of an agency’s defective administration, and who have no other avenues of redress (see
CEI -Making Payments of Public Money).

Special Account is an appropriation mechanism to draw public money from the CRF for
particular purposes. Special Accounts are established under section 20 of the FMA Act, or through
separate legislation as recognised under section 21 of the FMA Act. They should not be confused
with agency bank account (see CEI-Managing Public Money).

Special circumstances are not defined for the purposes of subsection 33(1) of the FMA Act, and
are ultimately a matter for the decision maker to assess. Generally these circumstances are
considered to apply where the decision maker is satisfied that:
     a loss has arisen directly from an alleged act or omission on the part of an agency/agent of
         the Australian Government:
             a) that the allegations relate to involvement by the agent/agency that was the direct
                 cause of the loss; and
             b) that the loss was not caused by the relevant agent/agency initiating processes that
                 were consistent with its responsibilities and in accordance with the Administrative
                 Arrangements Orders; or
     the application of Commonwealth legislation or policy is alleged to have had an
         unintended, anomalous, inequitable or otherwise unacceptable result in the applicant’s
         circumstances, and that those circumstances were:
             a) specific to the applicant;
             b) outside the parameters of events for which the applicant was responsible or had the
                 capacity to adequately control; and
             c) consistent with what could be considered to be the broad intention of the relevant
                 legislation; or
     the matter is not covered by legislation or specific policy, but the Australian Government
         intends to introduce such legislation or policy, and it is considered desirable in a particular
         case to apply the benefits of the relevant policy prospectively.
Special Instructions mean instructions issued by the Finance Minister under section 16 of the
FMA Act about special public money.

Special public money is defined in section 16 of the FMA Act to mean public money that is not
held on account of the Commonwealth or for the use or benefit of the Commonwealth. Money held
by the Commonwealth on trust for another person is an example of special public money (see
CEI-Managing Public Money).

Specified cash is defined in FMA Regulation 3 to mean cash in its physical form which is obtained
on credit or from a cash float provided by a person other than the agency that receives the
specified cash. This means that specified cash is an amount that is not drawn under an
appropriation and is instead borrowed from a credit provider. For example, where an official
withdraws an amount from a Commonwealth credit card in order to pay for goods or services in




                                                 267
cash.

Spending proposal is defined in FMA Regulation 3 to mean a proposal that could lead to entering
into an arrangement. A spending proposal may relate to a contract, agreement or other
arrangement under which public money is, or may become, payable. Examples include
arrangements for the procurement of goods and services, grant agreements, contingent
liabilities and credit arrangements (see CEI-Committing to Spend Public Money).

Staff member means an official.

Statutory Payments means an amount that is a payment of a benefit to a person, including a
payment of an entitlement established by legislation or by a government program or a tax
concession or offset.

Tax is classically defined (for Constitutional purposes) as a compulsory exaction of money by a
public authority for public purposes, which is enforceable by law and not a payment for services
rendered. However, this is not a reliable guide for identifying taxes in all cases. The payer of a tax
does not have a real choice about whether to pay the tax or not.

Tax invoice see valid tax invoice.

Transactional banking services include a range of services provided by a bank to facilitate the
day-to-day banking activities of an agency. Examples of such services include bank account
facilities, deposit and cheque processing services, the processing and distribution of electronic
credit and debit transactions, EFTPOS facilities and cash management. The Finance Minister
(and delegates, including Chief Executives) A Chief Executive (or their delegate) may enter into
an agreement with a bank for transactional banking services under section 8 of the FMA Act.

Travel see official travel.

Trust money is money that is held on trust, subject to trust law. Trust money held by the
Commonwealth is an example of special public money, under section 16 of the FMA Act.

Valid tax invoice is a document, generally issued by a supplier, which contains specific information
to satisfy legal requirements to enable an agency to claim an input tax credit (it may include a
recipient-created tax invoice).

Vendor card is a credit card issued by a specific retailer that authorises the holder to buy goods or
services on credit, with payment in full required at a later date. Examples include Cabcharge
cards, travel cards and fuel cards. Vendor cards issued to the Commonwealth are a form of
Commonwealth credit card.
Waiver is a special concession granted to an individual or other body that extinguishes a debt or
other amount owing to the Commonwealth. Waivers are granted by the Finance Minister (or a
delegate) under section 34 of the FMA Act (see CEI-Managing Debt).

Warranty means a promise whereby one party provides certain assurances to another party.
Warranties often relate to asset and sales agreements. For example, where an agency sells an
asset to a third party it may provide a warranty that the agency has a right to sell the asset, the
asset is fit for use and defective parts will be replaced within a specified period. A warranty may
give rise to a contingent liability.

Write off of a debt see non-recovery of a debt.




                                                 268
      Whole of Government Model CEI Provision




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