Retained Agency Receipts
(s. 31 of the FMA Act and r. 15 of the FMA Regulations)
· provides guidance on the operation of section31 of the Financial Management and Accountability Act1997 (FMA Act) and regulation 15 of the Financial Management and Accountability Regulations1997 (FMA Regulations);
· applies to all Agencies subject to the FMAAct;
· replaces Finance Circular 2008/07; and
· is available on the Finance website at http://www.finance.gov.au/publications/finance-circulars/index.html
What are ‘retained Agency receipts’? 3
Kinds of receipts that may be retained 3
Ten receipts for departmental activities that may be retained 3
Three additional Agency receipts that may be retained 7
Receipts that cannot be retained and conditions 8
Operational requirements 11
How to identify the most recent departmental item? 11
Tips for keeping track of receipts 11
Retainable amounts that are incorrectly remitted to the OPA 11
Agency banking and OPA banking 12
When is a departmental item increased? 12
When is revenue recognised? 12
Accounting and reporting 13
Cost Recovery receipts vs Retained Agency receipts 14
Attachment 1: Frequently asked questions 16
Attachment 2: Key Concepts – terms and abbreviations 17
Attachment 3: Extracts of relevant legislation 19
Finance Circular 2012/01
Page 7 of 7 Department of Finance and Deregulation
This circular includes operational guidance on the following matters:
· receipts relating to paid parental leave;
· receipts within the definition of specified cash;
· receipts relating to trusts or trust-like arrangements;
· an Agency’s inability to increase its departmental appropriation by debiting an administered appropriation that it manages;
· a determination made by the Minister for a scheme under regulation 15;
· amounts received in advance of providing a good or service (i.e. unearned revenue); and
· differences between receipts collected under the Government’s Cost Recovery policy and receipts retained under regulation 15.
Receipts received by an Agency are public money. The management of public money is a fundamental part of an Agency’s day-to-day activities and it is essential that all officials and their Ministers are aware of their legal and policy obligations in relation to public money.
The primary legal obligations for managing appropriations and public money arise from the Australian Constitution and these are further set out in the FMA Act and the FMA Regulations. Guidance on managing appropriations is available on the Finance website, for example in Finance Circulars. Further guidance is in Budget Paper No. 4, which is available on the Central Budget website and in Estimates Memoranda, which are available from the Knowledge Management menu of the Central Budget Management System (CBMS).
Questions on managing public money should be directed to your Agency’s corporate finance area in the first instance, and subsequently if necessary, to the designated Agency Advice Unit (AAU) within Finance. Questions relating to this Finance Circular may be sent to the Special Appropriations and Banking Policy Section at .
Acting Assistant Secretary
Appropriations and Cash Management Branch
Financial Management Group
10 July 2012
Finance Circular 2012/01
Page 7 of 7 Department of Finance and Deregulation
What are ‘retained Agency receipts’?
- Retained Agencies receipts are certain kinds of money received by an Agency that it may retain and spend by adding the amounts to its departmental appropriation. Section 31 of the FMA Act enables an Agency to increase its most recent departmental item by the kinds of receipts that are prescribed in regulation 15 of the FMA Regulations.
- When a departmental item is increased by a retained Agency receipt, the Agency should be mindful of the requirements of section 44 of the FMA Act, which requires Chief Executives to ensure the proper use of Commonwealth resources. This means that all resources managed by an Agency (including retained Agency receipts) must be used efficiently, effectively, economically and ethically, and in a manner that is not inconsistent with the policies of the Commonwealth.
Kinds of receipts that may be retained
- Regulation 15 includes two tables (at subregulation 15(2) and 15(3) respectively), which together set out thirteen kinds of receipts that Agencies may retain and spend under their departmental appropriation. Commencing at paragraph 6, allthirteen kinds of receipts are explained in this circular. Regulation 15 also includes conditions (at subregulations 15(4) to 15(9)), which an Agency must apply to each receipt to establish if the amount may be retained. Guidance on applying these conditions commences at paragraph 34.
- The main difference between the two tables is that receipts prescribed in the first table do not include amounts that have been debited by an Agency from an administered appropriation that it manages. This condition is in subregulation 15(5) and more explanation is provided at paragraph 40.
Ten receipts for departmental activities that may be retained
- Subregulation 15(2) provides the first table and this lists ten kinds of amounts that may be retained, if those amounts are received in relation to carrying out departmental activities.
Subregulation15(2), Item 1
An amount that offsets costs in relation to an activity of the Agency that receives it
- This item enables an Agency to retain a receipt that offsets costs in relation to an Agency activity. Examples of offsetting amounts include receipts received:
· for services provided by an Agency;
· for selling or hiring out goods (including leasing out goods);
· in advance of meeting an obligation to provide a good or service;
· for providing Agency staff to speak at another entity’s seminar (to offset costs such as staff time, travel or accommodation);
· from employees to offset salary sacrifice services provided by the Agency;
· from employees, consultants or contractors to offset the use of Agency facilities such as car parking, telephone or a photocopier;
· from Comcare to offset amounts passed on to employees;
· from royalties and licence fees to offset Agency costs to develop a product;
· in relation to a staff member attending jury duty. (Depending on the state or territory, a juror may receive payment for jury duty and pay this amount to the Agency to offset salary costs while away from work.);
· to offset costs for conducting litigation or dispute resolution;
· for sub-leasing excess building space to a café. (Please note that a building managed by an Agency as an administered asset does not usually generate receipts in relation to departmental activities.); and
· as repayments or refunds of amounts which were earlier paid by the Agency using its most recent or a former departmental appropriation. For further advice on managing repayments see Finance Circular 2011/04 "Repayments by and to the Commonwealth".
Subregulation15(2) Item 2
An amount that is a sponsorship, subsidy, gift, bequest or a similar contribution
- This item enables an Agency to retain an amount received explicitly to support an Agency’s departmental activities. Examples of such amounts include:
· money (distinct from goods) received from sponsors, for an Agency to run a seminar or for an Agency to participate in a trade show;
· employment subsidies, for example a monetary subsidy for an Agency to participate in a program that encourages the engagement of particular groups of people, such as staff involved in national security activities or defence reserve activities; and
· gifts of money or bequests. (See also the following guidance on trusts and similar arrangements.)
- Sponsorships, gifts, bequests or similar contributions received without the express purpose of contributing to the Agency’s departmental activities are amounts received for the Commonwealth as a whole and these amounts should be remitted to the OPA as administered receipts.
Subregulation15(2) Item 3
An amount that relates to a trust or a similar arrangement
- This item enables an Agency to retain an amount which is held on behalf of another person, such as in a trust or trust-like arrangement. Such amounts may be managed as part of an Agency’s departmental appropriation. It not necessary to use a Special Account to manage amounts held on trust. An adequate level of separation can usually be provided by managing such amounts using a separate general-ledger in the Agency’s accounts and records and/or a separate bank account.
- Money received in relation to a trust or a similar arrangement forms part of the CRF and is public money. Please refer to the FMOs available on the Finance website for the reporting requirements for assets held on trust.
- Before entering into trust-like arrangements, an Agency should become aware of the equity requirements for trusts, and the potential financial and other implications for the Commonwealth. In such cases, the Agency should obtain suitable legal advice and if necessary, also liaise with the Legislative Review Branch, in Finance, which can be contacted at .
- Agencies are not encouraged to establish formal trusts under a Trust Deed or a trust instrument, or to accept trust like responsibilities unless it is expressly in the Commonwealth’s interest to do so, having regard to the resourcing and management issues. Complexities can arise for such arrangements, particularly if a trust or bequest requires an Agency to perform services outside its legislated powers. This can arise, for example, where a trust agreement purports to oblige an Agency to invest a principal amount and earn returns or interest (including on bank accounts). In such cases, the Agency can only invest that amount if an officer in the Agency has been delegated the power to invest public money by the Finance Minister under section 39 of the FMA Act. In the absence of such a delegation an Agency would potentially be taking on obligations that it could not meet.
- In the event that an amount held on trust can be invested in accordance with section 39 of the FMA Act, then item 3 in the table of subregulation 15(2) enables an Agency to increase its most recent departmental item by any interest or return received from the investment.
Subregulation15(2) Item 4
An amount that is a monetary incentive or rebate in relation to a procurement arrangement
- This item enables an Agency to retain amounts received as incentives or rebates when procuring goods or services. Before accepting such amounts, an Agency should consider any implications for receiving value for money in the particular procurement and for the proper use of public money (as required by section 44 of the FMA Act).
- Examples of incentives and rebates that may be retained under this item include:
· fuel tax rebates; and
· cash bonuses that accompany the purchase of a good or service (such as cash vouchers from manufacturers of electrical goods).
Subregulation15(2) Item 5
An amount that is an insurance recovery
- This item enables an Agency to retain an amount received as a payout from an insurer in relation to departmental activities. Examples of such payouts include:
· ComCover payouts for departmental activities; and
· insurance arrangements for overseas departmental activities.
Subregulation15(2) Item 6
An amount that is in satisfaction of a claim for damages or other compensation
- This item enables an Agency to retain an amount received, in relation to departmental activities, as a result of negotiated compensatory settlements, court awarded costs or contractual provisions. It does not include penalties or punitive amounts, which are not compensatory and should be remitted to the OPA as administered receipts. Examples of amounts that may be retained include:
· compensatory out-of-court settlements; and
· compensatory court awarded costs.
Subregulation15(2) Item 7
An amount that relates to an employee’s leave (including paid parental leave)
- This item enables an Agency to retain an amount received relating to an employee’s leave entitlements, for example amounts received:
· under the Paid Parental Leave scheme (which commenced on 1 January 2011); and
· accumulated leave entitlements from a former employer of an Agency employee.
Subregulation15(2) Item 8
An amount that is specified cash
- This item enables an Agency to retain cash obtained in its physical form. Examples of specified cash are as follows:
· amounts of cash obtained using a Commonwealth credit card to pay for Agency expenses (for example, stationery or consumables); and
· cash floats obtained on credit (such as for an Agency shopfront or overseas post).
- In relation to the banking of specified cash, Agencies are required to act in accordance with Note 3 to subregulation17(2) of the FMA Regulations which provides that: “Chief Executives may approve other banking days for particular kinds of money (for example specified cash). These days may be determined in Chief Executive Instructions.”
Subregulation15(2) Item 9
An amount that relates to the sale of minor departmental assets of the Agency that receives the amount
- This item enables an Agency to retain amounts that are received from the sale of minor departmental assets. A minor departmental asset is defined in subregulation15(9) as “an asset for which the original purchase price was $10 million or less”. Examples of minor departmental assets include vehicles, furniture, fittings and specialist research or military equipment. Subregulation 15(7) applies a maximum annual cap to retaining such receipts; for further explanation please see paragraph 45 of this circular.
Subregulation15(2) Item 10
An amount received in relation to an application to the Agency under the FreedomofInformation Act 1982 (FOI Act)
- This item enables an Agency to retain amounts that are received in relation to fees charged for processing applications under the FOI Act. In charging such fees, Agencies are required to consult the appropriate provisions of the FOI Act. For example, this Act currently permits charges to process an application but does not permit the charging of an application fee.
Three additional Agency receipts that may be retained
- The table in subregulation 15(3) lists three additional amounts that an Agency may retain. These receipts are not limited to amounts received by an Agency from conducting departmental activities (unlike the amounts prescribed in the table in subregulation 15(2)).
- The three receipts listed in subregulation 15(3) are subject to conditions in subregulations 15(4) and 15(6). Receipts retained under a determination made by the Finance Minister under item 3 of the table in subregulation 15(3) are also subject to subregulation 15(8) and any additional conditions set out in the relevant determination.
Subregulation15(3) Item 1