2. Delegations, Authorisations and Appointments
The power to perform the actions and operations of the Executive Government of the Commonwealth is derived from the Constitution, which provides for the establishment of Departments of State that are to be administered by Ministers. Certain ministerial powers have been given to others through specific powers of delegation contained in legislation.
The FMA Act and Regulations establish the legislative framework for financial management. The department’s Chief Executive Instructions (CEIs) and Finance Management Manual (FMM) are supported by a system of:
- Delegations: powers under FMA legislationdelegated to an official by the Secretary;
- Authorisations: enable the holder to act for and on behalf of the delegate (eg Approver’s Agent acting for and on behalf of an FMA Regulation 9 Approver); and
- Appointments: identify officials to perform certain tasks prescribed by the FMM that are not specifically FMA legislated (eg Cashier, Bank Reconciliation official, etc).
DFAT financial delegations and appointments are generally made to a specific position (ex officio) rather than by name. This provides administrative flexibility, particularly where the temporary reassignment of duties and other absences of officials are likely to occur. Where a delegation or appointment is enacted in this way it automatically transfers to any official formally given the functional responsibility for the position, and new delegations or appointments are not needed when another official is temporarily assigned the duties of another position.
In circumstances where it is not beneficial to issue appointments to specific positions, and in the case of contractors (who are generally not held against positions), it is acceptable to issue them by name.
Authorisations are by name because they are the delegate’s personal decision to authorise another official to act for and on behalf of the delegate. When the delegate ceases to hold office the authorisation is no longer valid and a new authorisation will need to be issued by the delegate’s successor.
Where there is likely to be a gap between an outgoing delegate and an incoming delegate, another delegate will need to issue all necessary authorisations to enable the work unit to continue to operate. For example, if there is going to be a gap between the outgoing and incoming SAO at a post, the HOM should temporarily issue whatever authorisations are considered necessary to enable the post to continue to operate during the interim period.
2.2 Delegations, Authorisations and Appointments
Delegation can be defined as a statutory procedure permitting a person (the delegator) to entrust his/her statutory authority to another (the delegate). Delegates personally hold and possess the powers and responsibilities that they have been given (although the delegator retains the capacity to exercise the power or function that has been delegated) and are personally accountable for their decisions and actions.
The FMA Act and Regulations allow the delegator to issue directions to the delegate.
Notwithstanding the above, the delegator remains accountable for management of the power. The delegator should ensure that:
- delegation of the powers or functions are appropriate in terms of the level and position of the delegate(s) within the organisation;
- directions or conditions that might apply to exercising the delegation (including any accountability process), are clear and appropriate;
- delegates are adequately supervised, appropriately trained and have ready access to the relevant source and reference materials; and
- there is an adequate separation of duties (refer Chapter 2.3).
In practice, some of these responsibilities will fall to the immediate supervisor rather than the Secretary as the delegator.
Delegation of contractors
A contractor may be delegated on a case by case basis where the contractor occupies a position where they are held accountable for a departmental budget (ie generally contractors at equivalent SES level).
Delegations are not provided to service contract staff where a company, rather than an individual, is contracted to provide a service.
Requests to delegate contractors should be submitted to the Chief Finance Officer.
The request should include the following information:
- Work area
- Contractor's name
- Contractor's equivalent APS level
- Proposed duration of the delegation
- Proposed spending approval limit if it is different from the standard delegation limit for the APS level
- A brief explanation of why the contractor requires a delegation non-SES equivalent level contractors only)
Delegation requests must be signed-off by an SES officer. Where a contractor is engaged at the SES level the request must be signed-off by their supervisor.
Authorisation describes an official's capacity to exercise a particular power or function. Delegates personally hold and possess the powers and responsibilities they have been given, officials who are authorised only act for and on behalf of the person giving the authorisation - they do not operate in their own right. For example, if a Finance Manager authorises an official to act as an Approver’s agent then the official is merely authorised to act for and on behalf of the Finance Manager. Every act performed by the official in the exercising of that power will be, in law, an act of the Finance Manager, for which the Finance Manager will be responsible.
Delegates can only authorise someone to approve spending proposals under FMA Regulation 9 and to enter into arrangements under FMA Act s44 on their behalf. FMA Regulation 10 delegates may not authorise others to exercise their power.
As with delegations the onus is on the delegate giving the authorisation to ensure that the authorised official is appropriately qualified to carry out the particular task or function and there is an adequate separation of duties.
Appointments identify officials who perform certain tasks prescribed by the FMM that ensure that the department meets its obligations under the FMA Act and Regulations except that the task is not specifically FMA legislated. For example, FMA Act s10 requires an official who receives public money to bank it promptly. The FMM requires the Finance Manager to appoint a Cashier to undertake this task.
As with delegations and authorisations the onus is on the official making the appointment to ensure that the appointed official is appropriately qualified to carry out the particular task or function and there is an adequate separation of duties.
Instruments of Delegation, Authorisation and Appointments
Financial delegations are enacted through the Secretary’s delegation instruments available on the intranet. Authorisations and appointments are enacted via formal instruments (letters). Sample authorisation and appointment letters are included in FMM Forms folder. Also under the forms folder is an authorisations and appointments management tool to assist finance managers in organising their work units.
Letters of instruction must be issued to officials occupying positions, including on a temporary basis, with authorisations and appointments. Letters of instruction should clearly indicate the name of the official, the title of the position held, the position number (where applicable) and the responsibilities and functions of the official in relation to the authorisation or appointment.
Advice on delegations or appointments held by a position should also be included in handover notes for the position.
A written record is required for audit purposes in instances of temporary absence, whereby a position is temporarily filled for financial delegation purposes. PeopleSoft should be used where appropriate; however, the cable advising of HOM absences (as required by the HOM/HOP Handbook) would also be sufficient.
FMA Act agencies undertake financial tasks in accordance with their Chief Executive Instructions (CEIs), including appointing officials to undertake financial tasks.
Finance Managers cannot appoint or authorise non-DFAT officials to undertake financial tasks for an agency. Such appointments / authorisations must be made by the appropriate official in that agency. For example, a DIAC Cashier is appointed by a DIAC official under the DIAC CEIs and not under the DFAT CEIs (FMM).
DFAT officials must seek advice from the Chief Finance Officer before accepting a financial delegation, authorisation or appointment from another agency.
2.3 Separation of Duties
To facilitate internal control, it is a requirement that an adequate separation of duties is provided for. The ideal separation of duties in relation to the spending of public money would see all the functions involved in approval, verification, payment and reconciliation vested in separate officials. The minimum acceptable level of control over the spending of public money requires at least three separate officials to be involved in the process, except where risk assessments have been performed and approved by the CFO where required.
The optimal separation of duties is not always possible, especially at the smaller posts. The table below sets out the requirements for officials responsible for creating vendor master data, payments officials and bank reconciliation officials to undertake other roles.
The department has defined the official who checks and verifies the details of payments and processes the payment run at overseas posts as the “payments officer”. In Canberra the official that checks and verifies details of payments is known as “the certifying official” and the official that processes the payment run is known as the “funds controller”. In addition, it is important to note that two signatories are required for cheques and payments issued through an electronic banking system. At least one of the signatories must be an Australian-based official.
|Create vendor master data||Payment official||Risk assessment and CFO approval.|
|Payments official||Create vendor master data 1||Risk assessment and CFO approval.|
|Bank reconciliation official||Risk assessment and CFO approval.|
|Cheque signatory||Risk assessment and CFO approval.|
|Approver||Risk assessment and CFO approval.|
|Cashier 2||Risk assessment.|
|Bank reconciliation official||Payment run||Risk assessment and CFO approval.|
|Cashier||Risk assessment and CFO approval.|
1 Vendor master record changes must be reviewed on a monthly basis by a person independent of the Payment Function.
2 CFO’s approval is not required.
An Approver cannot approve a payment for their own benefit. Approver’s agents cannot approve payments to the Approver that they are an agent for as they are acting as the Approver. For example, an agent authorised by the Finance Manager cannot approve a payment for the Finance Manager.
Sample Risk Assessment
Certification & Payment processing is carried out by the 1st cheque signatory
Details of Post structure, staffing and background
Antarctica is a small post with 4 FTE LES and 2-A-based officers. Best practice of having five individuals involved in the payment process is difficult to achieve given the size of the mission and the competing demands and regular absences of staff. Present practice is for the certifying official (the accountant) to also act as the cheque signatory but they are not the cashier.
Guidelines would see the cashier performing 1st signature on cheques for payment. However the cashier is fully occupied in her position of passport/consular/LANA officer and is already struggling to cope with the workload and is working excessive hours. Neither of the remaining two LES (HOM driver and part-time research assistant) are suitable alternatives for cheque signatories due to their regular absences from the office and part-time hours.
We believe the current set-up allows for the most efficient processing of payments and carries a manageable risk.
Identifying the risk
|Opportunity to divert official funds to a personal bank account||Low||Moderate||Master vendor records are created by a separate individual||Low|
|Opportunity to create one-time vendor payment to a personal bank account||V Low||Moderate||One-time vendor records only used for passport/ consular refunds and cannot be created at post||Low|
|Possibility of issuing personal cheques for cash||Low||Moderate||Cheques cannot be cashed without a second signature, always an A-based officer||Low|
Analysing the risk
The opportunity for fraudulently diverting funds is assessed as low and adherence to existing processes and procedures limits the risk
Identifying risk treatment actions
The key control is that an A-based staff member will always act as counter-signatory and has been instructed in writing to pay careful attention to checking payments against payment proposal reports and FMA001 to ensure mitigation of risk.
Additional training of First Secretary (Political) and HOM will also be undertaken to ensure officers are aware of the checks which must be made prior to counter-signing any cheques or authorising direct debit payments.
Monitoring and review
The post will continue to look for opportunities to delegate an alternate LES as a cheque signatory to the certifying official in the light of any future changes to the LES establishment.
Where official credit cards are used, the normal separation of duties is not possible as all three functions (approval, certification and payment) are performed when the purchase is made. To ensure adequate control over credit card purchases the official who made the credit card purchase should not be the official who approves or certifies the payment of the credit card account (refer Chapter 7).
2.4 Flow of Powers
This section outlines the delegations and authorisations that apply under the FMA Act and Regulations.
Finance Minister Delegations
The Finance Minister has delegated some powers to the DFAT Secretary under the authority of the FMA Act and Regulations.
The Secretary can delegate, by written instrument, some powers to officials, including powers delegated by the Finance Minister. The Secretary’s financial delegation instruments are available on the intranet.
Officials who are charged with undertaking particular tasks must be clearly identified. This can be achieved by having either:
- formal instruments of authorisation issued to officials; or
- general authorisations issued as CEIs or Finance Management Manual instructions. General authorisations do not apply to spending public money.
The authorisations reflect arrangements made under the FMA Act and the officials so authorised or delegated to act for and on behalf of the Secretary.
2.5 DFAT Financial Management
The Secretary is responsible for the overall financial administration of the department.
The Secretary or their delegate is authorised to give instructions to officials in the department on any matter necessary or convenient for carrying out or giving effect to the FMA Act and Regulations. Refer FMM Chapter 1 for further information.
Division Heads, Branch Heads, HOMs and Finance Managers
HOMs, Division Heads and Branch Heads or equivalent (in Canberra) and Finance Managers (overseas and State/Territory Offices) are responsible for ensuring that:
- provisions of the FMA Act and Regulations are complied with by all officials under his/her control;
- requirements of the CEIs and the Finance Management Manual are observed;
- Departmental instructions on internal control are followed by all officials;
- appropriate mechanisms are in place to provide adequate security of public money and public property; and
- the structure of appointments within their jurisdiction are operationally efficient, provide adequate separation of duties (refer FMM Chapter 2.3) and are properly documented.
- A financial appointment should be are made to a specific position (ex-officio) unless the official (eg contractor) is not held against a position in which case the appointment should be by name. Letters of instruction must be issued to new position holders and officials temporarily filling positions.
- When making appointments the responsible official should ensure there is adequate separation of duties.
- An incoming Finance Manager (overseas/STOs) or Division Head or Branch Head or equivalent (in Canberra) should review financial appointments made by their predecessor as soon as practicable or within three months of commencing duty. Appointment holders operate in their own right so they can continue to operate if the appointing officer has ceased to hold office. However, it is good financial management practice, to ensure all appointments are reviewed as soon as practicable.
- Appointments should be reviewed by the appointing official when responsibilities or circumstances change.
- The appointment of positions with financial responsibilities should be made in writing and letters of instruction must be issued to the official (including when positions are temporarily filled). Officials must sign the letter to acknowledge that they have read and understood the instructions. A copy of the signed letter should be provided to the Finance Manager (overseas/STOs) or a Division Head or Branch Head or their equivalent (in Canberra). Staff being relieved of financial responsibilities should be advised in writing and reminded that handover/takeover procedures should be observed.
Approver’s Agent authorisations
- An incoming Finance Manager (overseas/STOs) or Division or Branch Head or equivalent (in Canberra) or any other FMA Regulation 9 delegate must reissue Approver’s Agent authorisations on commencement in their position. An authorisation holder is acting for and on behalf of the delegate so when the delegate changes the authorisation must be reissued.
- To enable the work unit to continue to operate for periods where there is likely to be a gap between an outgoing and incoming delegate, another delegate should temporarily issue all authorisations considered necessary.
- Authorisations should be reviewed by the delegate when responsibilities or circumstances change.
- Finance Manager (overseas and STOs)
- Division Head or Branch Head or equivalent (in Canberra)
- Approver’s Agent authorisations on commencement of duty
- Temporary authorisations to be issued for interim periods between outgoing and incoming delegates
- Appointments within three months of commencement of duty
- As required
- Reissue Approver’s Agent authorisations on commencement of duty.
- Issue temporary Approver’s Agent authorisations considered necessary for the work unit to operate during interim periods between outgoing and incoming delegates.
- Review instruments of appointment as soon as practicable or within three months of commencement of duty or when responsibilities or circumstances change to maintain adequate separation of duties and good internal control (refer Chapter 2.3).
- Issue letters of instruction advising new staff (and those temporarily filling positions) of their authorisations and appointments and any associated limitations as required.
- Ensure newly appointed staff acknowledge in writing that they have read and understood the instructions.
- Maintain a register of current appointments.