Financial Management and Accountability Amendment Regulations 2011 (No. 3)¹

I, QUENTIN BRYCE, Governor-General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following Regulations under the Financial Management and Accountability Act 1997.

Dated 30 June 2011

QUENTIN BRYCE

Governor-General

By Her Excellency’s Command

PENELOPE YING YEN WONG

1              Name of Regulations

                These Regulations are the Financial Management and Accountability Amendment Regulations 2011 (No. 3).

2              Commencement

                These Regulations commence on 1 July 2011.

3              Amendment of Financial Management and Accountability Regulations 1997

                Schedule 1 amends the Financial Management and Accountability Regulations 1997.

4              Transitional

         (1)   Subregulation (2) applies if an audit committee of an Agency under the Financial Management and Accountability Regulations 1997:

                 (a)     existed immediately before 1 July 2011; and

                (b)     was constituted in accordance with regulation 22C of those Regulations as in force immediately before 1 July 2011; and

                 (c)     is not constituted in accordance with that regulation, as amended by Schedule 1, on 1 July 2011.

Note   Regulation 22C was replaced on 1 July 2011 with new arrangements for audit committees. An example for paragraphs (b) and (c) is that an existing audit committee may not have an external member, as described in the new regulation 22C, on 1 July 2011.

         (2)   For the period commencing on 1 July 2011 and ending on 30 June 2012:

                (a)    the committee is not taken to operate in contravention of regulation 22C, as amended by Schedule 1, by reason only that it is not constituted in accordance with that regulation; and

               (b)    the Chief Executive of the Agency is taken not to contravene regulation 22C by reason only that the Chief Executive has not made arrangements to constitute or reconstitute the committee in accordance with that regulation.

Schedule 1        Amendments

(regulation 3)

[1]           Regulation 22C

substitute

22C         Audit committee (Act s 46)

Membership

         (1)   A Chief Executive who is appointing one or more members of an audit committee must:

                (a)    have regard to:

                          (i)    the Agency’s governance framework and assurance mechanisms; and

                         (ii)    the key risks to the Agency, including risks relating to program delivery and implementation; and

               (b)    ensure that each member to be appointed has, in the Chief Executive’s opinion, appropriate skills and experience to carry out the committee’s functions, including the ability to advise the Chief Executive about how the Chief Executive can manage the key risks; and

                (c)    ensure, as far as practicable, that the committee includes at least one member who is not an employee of the Agency (an external member).

         (2)   The Chief Executive must appoint a member of an audit committee (who may be an external member) as the Chair of the committee.

         (3)   The Chief Executive must give an audit committee terms of reference that include particulars of:

                (a)    its functions; and

               (b)    the frequency of its meetings; and

                (c)    its membership.

Functions of audit committee

         (4)   In addition to subsection 46 (1) of the Act, the functions of an audit committee include the following, unless the Chief Executive decides, in writing, that the committee is not to have a particular function:

                (a)    reviewing periodically the adequacy of the Agency’s governance arrangements;

               (b)    reviewing the operational effectiveness of the Agency’s risk management framework;

                (c)    reviewing the adequacy of the Agency’s internal control environment;

               (d)    reviewing the adequacy of the Agency’s controls that are designed to ensure the Agency’s compliance with legislation;

                (e)    advising the Chief Executive about the internal audit plans of the Agency;

                (f)    advising the Chief Executive about the professional standards to be used by internal auditors in the course of carrying out audits in the Agency;

               (g)    as far as practicable, coordinating work programs relating to internal and external audits;

               (h)    reviewing the adequacy of the Agency’s response to reports of internal and external audits;

                (i)    reviewing the content of reports of internal and external audits, for the purpose of identifying material that is relevant to the Agency, and advising the Chief Executive about good practices;

                (j)    advising the Chief Executive about action to be taken on significant matters of concern, or significant opportunities for improvement, that are mentioned in reports of internal and external audits;

               (k)    advising the Chief Executive on the preparation and review of the Agency’s financial statements;

                (l)    providing any other advice to the Chief Executive about the Chief Executive’s obligations under the Act.

         (5)   A Chief Executive may add to, or vary, the functions of an audit committee, having regard to:

                (a)    the Agency’s governance framework and assurance mechanisms; and

               (b)    the key risks to the Agency, including risks relating to program delivery and implementation.

22D         Special arrangements for audit committees (Act s 46, s 51)

         (1)   For sections 46 and 51 of the Act, the audit committee for Centrelink (the Commonwealth Services Delivery Agency) that was in existence immediately before 1 July 2011 is taken to continue in existence, on and after 1 July 2011, as if it were an audit committee established in the Department of Human Services for the purposes of:

                (a)    performing the functions of an audit committee in that Department; and

               (b)    allowing the Chief Executive of that Department to discharge his or her obligations under the Act for the financial year commencing on 1 July 2010 in relation to functions performed by Centrelink.

         (2)   For sections 46 and 51 of the Act, the audit committee for Medicare Australia that was in existence immediately before 1 July 2011 is taken to continue in existence, on and after 1 July 2011, as if it were an audit committee established in the Department of Human Services for the purposes of:

                (a)    performing the functions of an audit committee in that Department; and

               (b)    allowing the Chief Executive of that Department to discharge his or her obligations under the Act for the financial year commencing on 1 July 2010 in relation to functions performed by Medicare Australia.

         (3)   For sections 46 and 51 of the Act, the audit committee for the Department of Human Services that was in existence immediately before 1 July 2011 continues in existence, on and after 1 July 2011, for the purposes of:

                (a)    performing the functions of an audit committee in that Department; and

               (b)    allowing the Chief Executive of that Department to discharge his or her obligations under the Act in relation to the functions performed by that Department.

[2]           Schedule 1, after item 125

insert

[3]           Schedule 1, items 133 and 152

omit

1.       All legislative instruments and compilations are registered on the Federal Register of Legislative Instruments kept under the Legislative Instruments Act 2003. See http://www.frli.gov.au.