15. Miscellaneous Procedures

15.1 Introduction

This Chapter provides instructions on financial procedures, including:

15.2 Goods and Money found on Commonwealth Premises

Instructions

  1. Any money found on Commonwealth premises (including Government vehicles) must be immediately handed to the Cashier.  Any goods found on Commonwealth premises must be immediately passed to the Finance Manager.  Officials should consult the Consular Handbook in the event that lost property is found or handed in at overseas posts.
  2. In Canberra, any money found on Commonwealth premises (including Government vehicles) must be handed in to the National Cashier. Money found must be processed as Administered revenue and returned to the Official Public Account (OPA) by crediting GL code 19200 in Company Code 2000 ‘Unidentified/Found Money'.  The transactions should include the work unit's consular/passport receipts internal order.  State and Territory Offices should use their consular receipts internal order in Company Code 2000.
  3. Property found on Commonwealth premises must be immediately passed to the Security desk located near the front entrance of the RG Casey Building.  The Director, Domestic Property and Services Section (DPS) is responsible for ensuring that found items are registered and, if claimed within three months, returned to the owner.
  4. If the owner is subsequently established, the amount must be refunded using GL code 19205 in Company Code 2000 ‘Refund of Unidentified/Found Money'.  The transactions should include the work unit's consular/passport receipts internal order.  State and Territory Offices should use their consular receipts internal order in Company Code 2000.
  5. The Cashier must maintain adequate records of the receipt and subsequent refund (if applicable) of unidentified money.
  6. A reasonable search to locate the owner of lost property should include, as a minimum:
    • Using a drivers licence, or other items with addresses listed which are found in the lost property, to obtain the property owner's telephone number and contact accordingly
    • Using state/national directory assistance to obtain the telephone number
    • Conducting a search of the electoral roll to contact the party
  7. Property that remains unclaimed for 3 months should be disposed of in accordance with Chapter 13.7.
  8. If unclaimed property is to be disposed of by gift the provisions for gifting public property as set out in Chapter 13.13.

Procedure

Responsibility

Frequency/Conditions

Action

15.3 Borrowing

Borrowing as defined by FMA Act section 38 does not include:

Instructions

  1. The Chief Finance Officer, as the Secretary's delegate under FMA Act section 38, can approve the following borrowing arrangements:
    • For overdraft facilities with overseas banks which must be repaid within 90 days. Refer to FMM Chapter 6.5.
    • For the use of credit cards or credit vouchers by the department which must be repaid within 60 days. Refer to FMM Chapter 7.10.
  2. Apart from the above circumstances departmental officials must not enter arrangements to borrow money on behalf of the Commonwealth without the prior written approval of the Finance Minister.

15.4 Accounts and Records

The Secretary has delegated the Chief Finance Officer under FMA Act section 48 to maintain accounts and records in accordance with the Finance Minister's Orders (FMOs).  Under the FMA Act the Finance Minister is entitled to full and free access to the accounts and records.

Transactions must be accurately recorded in SAP so as to allow revenue, expenses, assets and liabilities to be identified.  STO and Overseas Finance Managers, the Director, Financial Services Section (Canberra) and the Director, Financial Performance Section (Canberra) are responsible for ensuring this on behalf of the Secretary.

Instructions

  1. STO and Overseas Finance Managers and the Director, Financial Services Section (Canberra) must ensure that the accounting records of their work area are correctly maintained through the implementation and maintenance of procedures and work practices in accordance with this Manual, through adherence to SAP instructions and compliance with other advice issued by Finance Management Branch from time to time.
  2. In accordance with the FMOs, accounts and records must be maintained in a way that:
    • Provide details of revenue, expenditure, assets and liabilities
    • Provide information for the preparation of aggregate reporting for the Commonwealth
    • Enable the preparation of financial statements
    • Allow the financial statements to be conveniently and properly audited
  3. Requests for SAP vendor master file changes must be substantiated by supporting documentation.  A copy of an invoice or written verification from a vendor or employee showing their name, address, and bank account (if necessary) suffices.  As the supporting document is deemed to be a financial administrative record used for accountability purposes it is retained for two years after it is actioned.

Procedure

Responsibility

Frequency/Conditions

Action

15.5 Financial Statements

The Secretary is required by the FMA Act to prepare annual financial statements.  The Finance Minister can request additional financial statements to be prepared.  Financial statements must be prepared in accordance with Finance Minister's Orders and Australian Accounting Standards.  The statements are prepared on the basis of information contained in SAP and provided by work areas.  They are subject to scrutiny by the Australian National Audit Office.

Instructions

  1. The Director, Financial Performance Section (FPS) must ensure that annual financial statements are prepared in accordance with the Finance Minister's Orders and are provided to the Auditor-General.
  2. The Director, FPS is to provide additional financial statements, covering periods of less than one year, as and when required by the Finance Minister.
  3. The Director, FPS is to provide End of Month financial statements as requested and in accordance with instructions issued by the CFO.
  4. Branch Heads (Canberra) and STO and Overseas Finance Managers must provide information to the Director, FPS to enable the preparation of annual and additional financial statements as requested and in accordance with instructions issued by the CFO.

Procedure

Responsibility

Frequency/Conditions

Action

Director, FPS
Branch Heads and Finance Managers

15.6 Electronic Interfaces with the FMIS

The use of management information systems to assist in a range of administrative functions is increasing.  In examining whether to introduce new systems or to upgrade existing ones, it is essential that the integrity of corporate management systems (those used department-wide) be maintained.  Approval from Finance Services and Systems Branch is required to employ any program or system that may impinge on the functionality or integrity of SAP.

Instructions

  1. STO and Overseas Finance Managers should not employ any program or system (electronic or otherwise) which will put the integrity of the department's Financial Management Information System (FMIS), SAP at risk.
  2. Finance Managers must seek the approval of the AS, FSB before introducing any software to SAP.

Procedure

Responsibility

Frequency/Conditions

Action

15.7 Indemnities, Warranties, Guarantees and Letters of Comfort

The approval of an appropriate delegate under FMA Act section 44 is required prior to entering into a guarantee, a warranty, an indemnity or providing a letter of comfort.

Introduction

A Commonwealth indemnity, guarantee, warranty or letter of comfort is ultimately a risk transference mechanism, which results in the Commonwealth accepting risks and the other party experiencing reduced risks.  The Australian Government's policy is to accept such risks only when the expected benefits, financial or otherwise, are sufficient to outweigh the level and cost of the risk which the Commonwealth would be assuming.  As a matter of principle, risks should be borne by those best placed to manage them – that is the Australian Government should generally not accept risks which another party is better placed to manage.

A Commonwealth indemnity, guarantee, warranty or letter of comfort should not be issued until it has been determined that all other options available (including commercial insurance) have been exhausted.  If insurance is readily available, then this is the preferable course of action and the proposal should not be approved.

The Commonwealth can give an indemnity, guarantee, warranty or letter of comfort to any party other than itself.  These instruments cannot be issued by one Agency within the Executive Government of the Commonwealth to another such Agency, as these Agencies are part of the Commonwealth for the purposes of the law.

Guarantee

A guarantee is a legally binding promise where one party undertakes to another party to be responsible for the debt or obligations of a third party, should the third party default in some way.  The giving of a loan guarantee must be authorised by the Finance Minister, or another person authorised by the Finance Minister for that purpose.

Indemnity

An indemnity is a legally binding promise where one party undertakes to accept the risk of loss or damage that another may suffer.  For example, the department may be asked to indemnify an external party against loss or damage from some departmental activity.  Reference should be made to Chapter 16 of this Manual for guidance on indemnity through insurance, including on public liability cover provided through the department's Comcover policy.

Warranty

A warranty is a legally binding promise where one party provides certain assurances to another party, for example, that an asset is the department's to sell, is fit for use, and that for a specified period, defective parts will be replaced or otherwise rectified.

Letter of Comfort

A letter of comfort is a form of reassurance that may be used to facilitate an action or transaction that might not otherwise occur.  As they are not intended to give rise to legal obligations, careful consideration of the wording of such letters is important.  Further advice can be obtained from DLB.

Instructions

  1. Employees must not enter into a guarantee, warranty, indemnity or letter of comfort (GWILOC) arrangement unless:
    • the instrument has been approved by the relevant delegate under FMA Act section 44 . Refer to the Secretary's delegation schedule on the Corporate Information Database under Delegations/Part B: Financial Delegations and Authorisations;
    • the contingent liability created by the GWILOC is authorised by the relevant delegate under FMA Regulation 10. A loan guarantee must not be given unless the Finance Minister has authorised the giving of the specific loan guarantee under FMA Regulation 14; and
    • the spending proposal is approved by the relevant delegate under FMA Regulation 9.
  2. All instruments under this category should be assessed against and be consistent with the policies set out in Finance's ‘Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort' that is attached.
  3. To assist work areas to assess whether the GWILOC complies with the Government's policy, the Contingent Liability Compliance Checklist provided at the FMM Forms folder must be completed for all instruments.
  4. At a minimum an instrument should include time limits, termination clauses, subrogation clauses and financial limits on liability.  Where instruments do not meet these requirements, the reasons must be documented in writing and provided to the relevant delegate(s).
    • Officials located in Australia (who have access to the Contracts Database) are required to enter details of all GWILOCs into the Contracts Database, under the "Guarantees Register" tab.  Further assistance in use of the contracts database can be obtained through PGS.
  5. For staff at post, it is essential that Canberra be notified of these instruments:
    • For approval; and
    • To enable officials in PGS to update the Guarantees Register in the Contracts Database on the post's behalf. Keeping the database current will assist the department to meet the requirements laid out in the Commonwealth guidelines on Guarantees, Warranties, Indemnities and Letters of Comfort and in complying with FMA Regulation 10 and other reporting requirements for contingent liabilities.

Procedure

Responsibility

Frequency/Conditions

Action

Contingent Liability Compliance Checklist

Finance's "Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort" provides a checklist of issues that must be reviewed before entering into a contract, agreement or arrangement that includes a contingent liability. A copy of the guidelines is available at the Finance Policies and Legislation section.

Risk issues

The following risk issues must be reviewed:

Contract Conditions

Legal advice

Legal advice should be sought in relation to:

15.8 Incidents involving Departmental Officials

A departmental official involved in an accident occurring in the course of their employment with the department, including an accident involving a departmental vehicle, whereby civil or criminal proceedings against the employee or the department may arise or have arisen, must report the matter immediately to their Finance Manager or Branch Head who should forward the information to the Chief Finance Officer.

Instructions

  1. A departmental official involved in an incident occurring in the course of their employment with the department, whereby civil or criminal proceedings against the employee or the department may arise or have arisen, must report the matter immediately to their Supervisor, Branch Head and the Comcover representative in PGS.  Directions will then be given to the official about appropriate contact with Comcover, and the provision of relevant information to other areas in the department including the CFO.
  2. All officials involved in an incident must ensure that no admission of liability is made at any stage unless legal advice has been obtained to the effect that such admission is appropriate.
  3. Instructions for reporting incidents that may result in a claim against either the department's Comcover insurance policy, Comcare insurance policy or other insurance policies can be obtained from the Comcover representative in PGS.
  4. The department has insurance with Comcover for a range of insurable events including general liability, products liability and professional indemnity.  Refer to FMM Chapter 16.
  5. The department has insurance with Comcare for workplace accidents and other occupational health and safety incidents which may give rise to workers' compensation claims.  The department also has an internal system for recording incidents, accidents or near misses related to the OHS(CE) Act which do not need to be reported to Comcare.
  6. The department has comprehensive and third party insurance on its motor vehicles.  Where an employee is involved in an accident relating to a Commonwealth vehicle, either as a driver or passenger, appropriate enquiries should be made to determine which insurer the department has a policy with.
  7. In addition to the above, the Manager of the official or an appropriate delegate, should:
    • Ensure that the Commonwealth's interests are protected by making certain that no admission of liability has been made unless legal advice has been obtained
    • Ensure that detailed reports concerning incidents involving Commonwealth employees are obtained
  8. After consultation with the department's relevant insurer, it may be necessary to obtain additional legal advice on the incident.  Officials should seek the advice of DLB.  Depending upon the nature of the legal issue at hand, DLB may then instruct an appropriate Australian legal service provider (or local legal advisers in the country concerned) to take any further necessary legal steps.

Procedure

Responsibility

Frequency/Conditions

Action

15.9 Sponsorship

Please refer to FMM Chapter 8.8

The department's policy on sponsored travel is based on principles set out in the Public Service and Merit Protection Commission (PSMPC) Guidelines on Official Conduct of Commonwealth Public Servants and the APS Code of Conduct.  Sponsored travel refers to cases where the costs of transport, accommodation and/or living expenses are met from sources other than official departmental funds or the officer's own resources.

Instructions

  1. Sponsored travel refers to cases where the costs of transport, accommodation and/or living expenses are met from sources other than official funds or the staff member's own resources.  The department's policy on sponsored travel is based on principles set out in the Public Service and Merit Protection Commission (PSMPC) Guidelines on Official Conduct of Commonwealth Public Servants and the APS Code of Conduct. (Refer to the Conduct and Ethics Manual for further details).  These stipulate that:
    • The Commonwealth should meet the expenses associated with work undertaken on its behalf by its staff members;
    • Public servants and their departments should avoid a conflict of interest or the appearance of such conflicts; and
    • Private organisations that cannot afford to sponsor travel for public servants should not be placed at a disadvantage to those who can.

Offers by Foreign Governments or Institutions

  1. Departmental policy allows sponsored travel in certain circumstances when offered by an inter-governmental or international agency, another government, an educational institution, or a non-profit organisation or broad-based industry group.  However, they must be reputable organisations and there must be no real or perceived conflict of interest created by accepting the offer.

Offers by Private Companies or Commercial Organisation

  1. Travel that furthers the objectives of the department should be met by the relevant work unit, including travel to commercially-based conferences and meetings.
  2. In cases of travel to remote localities where no other commercial air link exists, offers of sponsored travel on company aircraft may be acceptable, but where possible the company's costs should be reimbursed.  In situations where this may be difficult to identify, the following principles apply:
    • there should be no scope for perception of personal benefit for the staff member involved;
    • details of the travel and associated costs with relevant approvals are to be retained on the appropriate gifts file;
    • where the travel relates to the Head of Mission/Post/State and Territory Directors, the matter should be referred to the Conduct and Ethics Unit (CEU) for consideration.  For all other employees the decision may be taken by the Head of Mission/Post/State and Territory Director;
    • funds for the reimbursement of travel or accommodation costs should only be accepted in cash where there is no other alternative.  Cash should not be accepted without an invoice/receipt confirming the amount received; and
    • to minimise personal benefit or the perception of personal benefit, the organisation involved should be advised in writing of departmental policy and that the standard of travel and accommodation hospitality offered should be consistent with the level of the staff member's standard travel allowance (T/A) and accommodation entitlements.

Decisions on Sponsored Travel

  1. The question of whether to accept sponsored travel should be assessed against the following criteria:
    • the proposed activity should be consistent with the department's objectives;
    • there is a clear Australian national interest;
    • there is a specific contribution the department/post can make to the outcomes of the trip;
    • the department/post/state/territory office is not aware of any other Australian companies that might be competitively disadvantaged by acceptance of the offer;
    • there is no perception of personal benefit to the staff member travelling; and
    • the organisation has been advised in writing of the department's policy and accordingly that the standard of travel and accommodation hospitality offered should be consistent with the level of the staff members standard travel allowance (T/A) and accommodation entitlements.

Procedure

Responsibility

Frequency/Conditions

Action

15.11 Gifts, Benefits and Hospitality

Please refer to the Conduct and Ethics Manual

15.12 Administrative Procedures Checklist

The monthly Administrative Procedures Checklist (APC) and the Self Assessment Manual (SAM) provide critical elements of the department's financial assurance framework. A list of APC items is attached.

Instructions

  1. The APC work unit administrator (eg Overseas and STO Finance Managers, Divisional Coordinators, etc) must ensure the APC has been completed, certified and forwarded to the work unit manager (eg HOM/HOP, Division Head, STO Director, etc) for sign-off by the 15th day of the following month.
  2. Before certifying the APC the work unit administrator must assure themselves that:
    • Officials completing the APC have undertaken the appropriate checks in support of their sign-off
    • All non-compliance, including those identified by an internal audit and the SAM, has been identified and reported.
  3. Finance Managers must also ensure that the end of month SAP Finance Manager reports have been examined and actioned (where required) before certifying the APC.
  4. The work unit manager must sign-off the checklist and any non-compliance report(s) by the 15th calendar day of the following month.

Procedure

Responsibility

Frequency/Conditions

Action

Administrative Procedures Checklist items

Work unit items

Category APC item Frequency Ref.
Accounts and records Was the SAP asset register accurately maintained? Monthly FMM 13
Were all financial transactions accurately and promptly entered into SAP or PTWS? Quarterly FMM 15.4
Appointments and authorisations Were financial authorisations and appointments updated as a result of staff changes or changes to staff responsibilities? Monthly FMM 2.1
Appropriations Were only eligible receipts retained? Quarterly FMM 3.5
Banking Were all bank accounts reconciled and signed-off at least once during the month? Monthly FMM 6.10
Were all collections of public money banked within the frequency determined by the Finance Manager? Monthly FMM 6.6
Were any overdraft drawings repaid within 30 days? Monthly FMM 6.5
Did an appropriate FMA Act delegate correctly authorise all agreements for standing bank overdrafts? Quarterly FMM 6.5
Did an appropriate FMA Act delegate correctly authorise new banking arrangements or opening of new bank accounts? Quarterly Finance Minister delegations
Budget Management Does the forecasted expenditure remain within allocated budget for the year? Monthly AC P0811
Collection and custody of public money Were 5.11 checks of Cashier collections undertaken during the month? Monthly FMM 5.11
Were 5.11 checks of all permanent cash advances of AUD 10,000 or greater undertaken during the month? Monthly FMM 5.11
Was any money or property found on Commonwealth premises handled correctly? Quarterly FMM 15.2
Were 5.11 checks of all permanent cash advances of less than AUD 10,000 undertaken during the quarter? Quarterly FMM 5.11
Were all stocks of accountable documents held by DFAT independently and randomly checked during the quarter? Quarterly FMM 12.6
Did a FMA Act Section 12 delegate authorise arrangements for the receipt or custody of public money by non-departmental persons? Quarterly Finance Minister delegations
Credit Cards Were credit card statements reconciled with supporting documentation correctly? Monthly FMM 7
Debt Management Was appropriate action taken on overdue advances and debts by Finance Managers and Divisional Coordinators in Canberra? Monthly FMM 10.3, 11.3, 11.4
Were outstanding advances and debts reviewed by the Finance Manager or Divisional Coordinator in Canberra? Monthly FMM 10.3, 11.3, 11.4
Did a FMA Act delegate correctly write-off any debts and provide AS FSB with the supporting documentation within 30 days? Quarterly FMM 11.7
Drawing Rights Were all payments from bank accounts made by appointed Funds Controllers? Monthly FMM 4.7
Were all payments from cash advances made by appointed Advance Holders? Monthly FMM 4.7
Fraud If fraud was identified, was it reported to the Conduct and Ethics Unit (CEU)? Monthly FMM 14.4
Grant Administration Were awarded grants approved in accordance with departmental grant policy? Quarterly FMM 8.7
Were awarded grants reported on the department's website within 7 working days of the funding agreement taking effect? Quarterly FMM 8.7
Management of public property Was any gift of departmental property approved by the CFO? Quarterly FMM 13.3
Was any loss or misapplication of public property reported to the Finance Manager or AS FSB in Canberra? Quarterly FMM 13.8
Were new property lease obligations correctly approved and reported under the Lands Acquisition Act 1989? Quarterly OPMG 2.10
Overseas Staff Have all new LES completed the LES questionnaire? Quarterly AC P0573
Was the Overseas Staff Profile data accurately maintained and signed-off by attached agency officials at post? Monthly  
Were Superannuation Guarantee Contributions payments made for relevant LES? Monthly AC P0573
SAP operations Was SAP user access checked for currency and appropriate separation of duties? Monthly FMM 2.3
Were SAP Finance Manager audit reports examined and actioned where required? Monthly FMM 8.12
Spending money Was procurement undertaken in accordance with the departmental Procurement Guidelines? Monthly DFAT Procurement Manual
FMM 8.5
Were all spending proposals approved by a FMA Regulation 9 delegate before commitments were entered into? Monthly FMM 8.4
Were all spending proposals approved on the basis they would make efficient, effective and ethical use of resources that is not inconsistent with the policies of the Commonwealth? Monthly FMM 8
Were spending proposals with contingent liabilities and / or which will require payments in future financial years authorised in writing by the appropriate FMA Regulation 10 delegate? Monthly FMM 8.4

Corporate finance items

Category APC item Frequency Ref.
Appropriations Were drawing rights issued by an FMA Act Section 27 delegate? Quarterly Finance Minister delegations
Were all payments, including refunds of administered receipts, funded from the correct appropriations? Quarterly  
Banking Did the FMA Act delegate comply with the Finance Minister's instructions to maintain a register of overseas bank accounts and annually review the continuing need for bank accounts? Quarterly FMM 6.2.1
Did the FMA Act delegate comply with the Finance Minister's instructions to report new overdrafts and annually review the continuing need for the overdrafts? Quarterly FMM 6.5
Budget Management Were all Departmental budget estimates statements prepared and estimate information provided in accordance with the prescribed requirements of the Finance Chief Executive? Quarterly FMM 3.4
Is the agency operating within the agreed resources for the current financial year and has it adopted appropriate management strategies for all currently known risks that may affect the financial sustainability of the agency? Quarterly  
Was the foreign exchange no win/no loss budget adjustment calculated in accordance with the foreign exchange risk management guidelines? Quarterly FMM 17.3
Collection and custody of public money Was any determination that a currency is non-bankable made by an appropriate FMA Regulation delegate? Quarterly FMM 5.5
Investment Were bonds, debentures or other securities received by the department handled in accordance with FMA Regulation 20? Quarterly  
Spending money Were government guidelines on entering into agreements that include guarantees, warranties, indemnities and letters of comfort considered and adhered to? Quarterly FMM 15.7
Was Finance's approval sought before the department entered into any commitment that would result in a foreign currency exposure exceeding $100 million? Quarterly Foreign exchange guidelines
Transfer employee entitlements Were employee leave entitlements paid to the receiving agency within 30 days of receipt of a correctly rendered invoice? Quarterly  
Special accounts Did the special account have a positive cash balance and were all payments and receipts consistent with the purpose of the special account? Quarterly FMM 3.3
Were all special accounts reviewed in the last 12 months to ensure they were required? Quarterly Special account guidelines

15.13 Financial Management of Social Clubs

References to "social club" should be read to include recreation centres and commissaries.

Instructions

  1. These procedures do not apply to a social club (eg Defence commissary) that is subject to oversight by a non-DFAT official.

Establishment of a social club

  1. The work unit manager (ie HOM/HOP, STO Director or FAS CMD for social clubs in Canberra) may approve the establishment of a social club after taking account of the following factors:
    • availability of local facilities;
    • welfare of staff;
    • risks associated with security, public liability and damage to the Department's reputation; and
    • resource implications required to comply with legal and financial requirements.
  2. The work unit manager must ensure the social club:
    • Does not have a separate legal entity to the Department
    • Complies with local laws
    • Complies with the Department's requirements in relation to diplomatic privileges
    • Complies with the Department's requirements in relation to public liability insurance and has arrangements in place to minimise the Department's public liability risks
    • Has a governance framework which provides for the efficient, effective and ethical operation of the social club.

Annual review of the continuing need for a social club

  1. The work unit manager, in conjunction with the Finance Manager or Director, MCS (for social clubs in Canberra) must, at least annually, review the social club and be satisfied there is a continuing need for the social club. Annual assessments are not required to be submitted to the CFO.

Oversight of social club activities

  1. The work unit manager, or an A-based DFAT officer appointed by the manager, must ensure all social club activities meet public safety requirements and will not damage the Department's reputation.

Financial management of social clubs

  1. When establishing a social club, the work unit manager must ensure an assessment is undertaken, in accordance with the Department's guidelines (attached to this section), to determine if any money collected by the club constitutes public money within the terms of the FMA Act.
  2. Further assessments must be undertaken when there is any material change to the social club structure or normal activities (eg alteration to collection of money,  access arrangements).
  3. The work unit manager must provide social club establishment or material change assessments to the CFO within 30 days of sign-off.

a. Public money activities

  1. The work unit must seek advice from the CFO on how to proceed where a social club collects public money. Where the social club collects public money the social club must:
    • Undertake financial tasks relating to the receipt, custody and payment of public money and control and management of public property in accordance with the Finance Management Manual, SAP Help Cards and other guidance
    • Maintain detailed auditable accounting records, including inventory and assets, outside SAP, and record transactions in SAP at a summarised level
    • Operate a separate official bank account in accordance with the standard SAP accounts payable, accounts receivable and bank account reconciliation procedures
    • Only retain and spend public money in accordance with FMA Act section 13 and FMM Chapter 3.2.

b. Non-public money activities

  1. A social club that does not collect public money should be managed in accordance with the DFAT Better Practice Guide on Managing Social Clubs, Recreation Centres and Commissaries.

Closure of a social club

  1. When a social club is closed the work unit manager must seek advice from the CFO before disbursing any cash surplus and assets even if no public money is involved.

Procedure

Responsibility

Overseas
In Australia

Frequency/Conditions

Action

Assessment of social clubs, recreation centres and commissaries

This document provides guidance for posts and work units in Australia (collectively referred to hereafter as ‘the Department') to determine if money collected by a social club, recreation centre or commissary (collectively referred to hereafter as "social clubs") constitutes public money as defined by the Financial Management and Accountability (FMA) Act.

The FMA Act defines public money as:

This document does not apply to a social club (eg Defence commissary) that is subject to oversight by non-DFAT officials.

Departmental control

Money collected by a social club is public money where the Department exercises control over the social club (or any of its activities) to the extent that a reasonable person would conclude the social club is acting for and on behalf of the Department.

The Department's Finance Management Manual (FMM) requires the work unit manager (eg HOM/HOP), or an A-based DFAT officer appointed by the manager, to assess social club activities to ensure activities meet public safety requirements and the Department's reputation is protected.  This oversight of social club activities does not constitute "control" for public money purposes.

Where the assessment determines the Department exercises sufficient control over the social club (or an activity) the money collected and payments made by the social club (or in relation to the activity) must be treated as public money in accordance with the FMM.

Money collected in relation to any social club activity where the Department does not exercise sufficient control is not public money. These activities should be managed in accordance with the "Better Practice Guide on Managing Social Clubs, Recreation Centres and Commissaries" to be released shortly.

While the Department may not exercise sufficient control over the social club, it may exercise control over a particular activity (eg the Department instructs the social club to organise the DFAT Ball on its behalf).  In order to determine the extent of the Department's control an assessment should be undertaken of the social club structure and (if necessary) individual social club activities where there is a risk the activity could be considered as falling within the definition of public money.

Social club public money factors

The following factors would indicate the Department exercises sufficient control over the social club:

On the other hand the following factors would not in themselves indicate the Department exercises control over the social club:

Social club activity public money factors

The following factors would indicate the Department exercises sufficient control over an activity:

The Department would not exercise sufficient control where:

Assessment

Frequency

When a social club is established the work unit must undertake an initial assessment of the social club and activities to determine if money collected by the social club constitutes public money. Further assessments would be required as a result of any material changes to the social club structure or the commencement of a new activity outside the social club's normal operations.

Assessment process

The first step is to assess the social club structure.

Where the assessment shows the Department exercises sufficient control of the social club all money collected by the social club is public money and there is no need to assess individual activities undertaken by the social club.

Where the assessment found the Department does not control the social club, the next step is to assess each activity. Money collected in relation to any activity where the Department exercises sufficient control is public money.

The assessment should include a description of the social club structure / activities and an assessment against the public money factors discussed earlier. The assessment needs to be signed-off by the work unit manager.  Where the social club collects public money the work unit must seek the Chief Finance Officer's advice on how to proceed.

Sample assessment of a social club

Assessment of the social club

Description of social club structure

The Department establishes a social club to run fortnightly happy hours, sporting events and the annual Department ball. The Department:

Assessment

All money collected by the social club would be public money because the Department makes a material financial contribution to the club and exercises significant management control over the club.

Assessment of possible activities where the social club structure does not imply all activities are public money

Happy hour

Description of activity

The social club runs a happy hour each fortnight at the chancery. The social club is not required to pay for utilities or rent. Members pay for their drinks. Drink prices are set to cover direct costs (eg bar staff, drinks, light snacks, etc).

Assessment

Money collected would not be public money. While the activity is held on Departmental property the Department does not exercise sufficient control over the activity.

Commissary

Description of activity

The social club runs a commissary at the chancery that sells Australian goods to employees. The social club is not required to pay for utilities or property costs. Employees make a one-off payment to access the commissary and pay for all goods purchased. Goods are priced at cost price plus a small margin to cover other direct costs.

Assessment

Money collected would not be public money. While the activity is held on Departmental property the Department does not exercise sufficient control over the activity.

Sporting event (1)

Description of activity

The social club organises the annual Social Club Divisional Tennis Challenge that is held at the local tennis centre. The Department pays the $1,500 court hire and allows employees time off to participate in the event.

Assessment

Money collected would be public money. Although the activity is promoted as a social club event (and not a Departmental event) the Department has made a material financial contribution and allowed the event to be held during normal working hours.

Sporting event (2)

Description of activity

The social club organises the annual Social Club Divisional Tennis Challenge after work. The social club pays the $1,500 court hire and the Department provides the winner's trophy valued at $150.

Assessment

Money collected would not be public money because the Department's financial contribution of 10% of the activity budget is below the 30% materiality threshold.

Social club annual ball

Description of activity

The social club organises the Annual Ball.  The event is held at a local function room and the organising committee prices the tickets to cover all costs. No commitments are entered into in the Department's name.

Assessment

Money collected for the activity would not be public money because the Department does not exercise any control over the activity. In this example the name of the event (ie DFAT or Social Club Annual Ball) is not relevant.

DFAT annual ball

Description of activity

The Department requests the social club to organise the DFAT Annual Ball (ie the activity is promoted as the DFAT Annual Ball, rather than the Social Club Annual Ball) and authorises the social club to enter into an agreement with the local hotel.

Assessment

The money collected for the activity would be public money because the social club is acting for and on behalf of the Department even though the Department makes no financial contribution.

Vending machines

Description of activity

The Department allows the social club to install drink / snack vending machines in the office. The goods are sold at cost price which provides a benefit to all employees. The social club is not required to pay for utilities.

Assessment

Money collected for the activity would not be public money. While the vending machines are installed on Departmental property and use Departmental electricity, these are incidental factors and do not constitute sufficient control by the Department.

Charity fund raising

Description of activity

The Department requests the social club to collect donations to a charity during a happy hour. The money is donated in the Department's name.

Assessment

The money collected would be public money because the social club is acting for and on behalf of the Department.

15.14 Cost Recovery

Cost recovery is the recovery of some or all of the costs of a particular activity through fees for goods and services or levies.

Instructions

  1. Work area managers must ensure the recovery of the full direct costs (refer to the Cost Recovery Guide that is attached to this section for more information) of providing goods/services to all external (ie the Government and private sectors) entities except where:
    • Cost recovery is not cost effective (ie the recovery costs are greater than the amount to be recovered).
    • The department is funded through the Commonwealth Budget to provide the goods/services.
    • Cost recovery is not consistent with government policy objectives.
  2. Work areas providing goods/services on a regular basis must develop costing models that:
    • Demonstrate the linkage between the costs to be recovered and overall cost of providing the service.
    • Are documented in appropriate detail, including any assumptions, for audit purposes.
    • Use labour cost data provided by BDS (where available).
  3. Costing models should be updated at least annually.
  4. Work areas must not recover excess costs or use cost recovery to cross-subsidise a Budget funded activity.
  5. Seek advice from FPT where work areas need to recover costs from the non-government sector and:
    • The cost recovery is expected to exceed $1 million pa; or
    • The work area is undertaking a business activity with the primary objective of competing with the private sector and earning a commercial return.

Cost recovery guide

Government policy framework

Cost recovery

The Government cost recovery policy requires agencies to:

Competitive neutrality

Agencies must comply with the competitive neutrality policy where they undertake business activities with the primary objective of competing with the private sector and earning a commercial return.

Competitive neutrality aims to offset competitive advantages resulting from government ownership (eg exemption from taxes, cheaper debt financing, the absence of a requirement to make a commercial rate of return, etc) to provide a level playing field for competition between a government business activity and its competitors.

Cost recovery from the non-government sector

Work areas undertaking cost recovery from the private sector should consult with the FPT if they consider the Cost Recovery Impact Statements or Competitive Neutrality provisions apply.

When cost recovery may not be appropriate

Cost recovery may not be appropriate where:

Work areas should seek advice from the FPT if they consider cost recovery would not be appropriate for either goods/services it supplies on a regular basis or the recoverable amount could be material.

Costing models

Work areas are responsible for developing costing models where a good/service is provided on a regular basis. The costing model must clearly demonstrate the linkage between the costs to be recovered and the overall cost of providing the good/service. It is important that the costing model is documented, including any assumptions, for audit purposes. Costing models should be updated annually to reflect changes in costs and other factors.

Costing models must use labour cost (including on-costs) data provided by BDS. To avoid claims of "cost padding" by customers the costs used in the model should reflect the most efficient cost (ie the minimum cost necessary to deliver the product and still maintain quality over time).

Work areas must not recover excess costs (ie make a profit) nor use cost recovery to cross-subsidise a related Budget funded activity.

Direct costs

The direct cost of providing the good/service should be recovered. Direct costs are costs that can be directly and unequivocally attributed to delivery of a product. Direct costs include labour (including on-costs) and materials used to deliver products.

Direct costs do not include overheads or capital costs such as depreciation. However, the direct costs of systems built to support the provision of the products and services, or where the service provided is an IT system, then a charge for capital costs should be included.

Retention of costs recovered

Work areas can retain and spend amounts received under cost recovery arrangements in accordance with the FMA Act section 31.

Examples

The following examples of cost recovery arrangements are provided as guidance:

15.15 Retaining money received by DFAT

What money can DFAT keep?

DFAT can only retain and spend money that falls into one of the following categories. Other money received by DFAT must be treated as Administered receipts and returned to the Official Public Account.

Departmental receipts

FMA Act section 31 provides the authority for DFAT to retain and spend eligible departmental receipts.

Note: The repayment of money paid by the department in a previous financial year and not accrued in that year, is held centrally and must not be re-credited to work unit budgets. Refer to the "Accounting Treatment" section below.

Eligible departmental receipts

The following departmental receipts specified in FMA Regulation 15 can be retained.  All other departmental receipts must be treated as Administered receipts and returned to the Official Public Account.

Note: The department's appropriation is increased only when the cash is received and the receipt is recorded.

Accounting treatment

The following accounting treatment applies to eligible departmental receipts:

Repayment of amounts paid in:
Revenue relating to:

Administered receipts

Receipts

Administered receipts relate to money for activities administered by DFAT on behalf of the Government. Administered receipts must be returned to the Official Public Account. Examples include passport and consular fees.

Administered repayments

FMA Act section 30 provides the authority to re-credit an appropriation with amounts received as repayments in the following circumstances:

Repayments to Administered appropriations that do not fall within the above must be treated as Administered receipts and paid to the Official Public Account.

Accounting treatment

The following accounting treatment applies to Administered repayments:

Tax refunds from foreign governments

Many countries impose taxes (eg VAT, GST, fuel excise) on the purchase of some goods and services. Under reciprocal arrangements, posts may be able to claim a refund of some or all of the tax paid on specified transactions.

Work areas should seek a refund where it is available and cost effective so the Commonwealth receives all amounts owing to it.

DFAT portion

DFAT's refund is an eligible departmental receipt. The work area's budget will be increased when the tax claim is recorded in SAP either as a debt when a claim is lodged or as accrued revenue in the End of Month accrued revenue schedule if a claim is not lodged.

Work units cannot carry over tax refunds that remain unspent at the end of the financial year. Tax refunds that relate to amounts paid in previous financial years must be recorded against cost centre Z7004 and GL code 18015 Repayment of Former Year Expense.

Attached agency and employee portions

When the tax claim is recorded as a debt in SAP the attached agency and employee portions are credited to the Foreign Tax Refund suspense GL account. Amounts owing to attached agencies and employees must not be recorded as accrued revenue in the End of Month schedules. Attached agencies and employees must not be paid until the tax refund has been received and reconciled.

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