Disclaimer: This is guidance material only and does not replace reading the legislation

Financial reporting

All agencies required to prepare financial reports must prepare those reports and submit them in accordance with Public Sector Finance and Audit Act 1983 (“PF&A Act”)

Agencies are required to use the attestation statement that was previously used under the PF&A Act for their 2019-20 financial statements.

  • Each of the agencies that were previously relieved from the PF&A Act requirement to prepare a separate financial report in 2018-19 (i.e. those agencies that are listed in clauses 9 and 12A of the Public Finance and Audit Regulation 2015 [“PF&A Regulation”]) will be relieved from that requirement again in 2019-20, where they continue to be dormant.
     
  • In addition, the COVID-19 Legislation Amendment (Emergency Measures—Treasurer) Act 2020 amended the PF&A Regulation to exempt the following kinds of Department and statutory body from PF&A Act financial reporting requirements.  The PF&A Regulation's new Schedule 2 clauses 3 to 6 specifies:
    • The kind of Department and statutory body that are exempt (e.g. 'small agencies'), and
    • The factors determining whether a Department or statutory body is part of that kind (see Box 1 below).
  • However, the PF&A Regulation does not individually list the names of exempt agencies. The wording of the PF&A Act exemptions is the same as for the GSF Act exemptions that Treasury previously designed in consultation with agencies.dept agencies
    Treasury has already contacted officers at relevant Departments concerning these other agencies.

Treasury's Accounting Policy Team will contact Cluster CFOs for help identifying those agencies likely to be relieved from PF&A Act reporting requirement for 2019-20. In future financial years, Treasury will ask those Cluster CFOs to confirm agencies likely to be subject to that reflect in those years.

  • The COVID-19 Legislation Amendment (Emergency Measures—Treasurer) Act 2020 included amendments to the PF&A Act that defer the statutory deadlines for agencies to submit their financial reports to the Auditor-General and the relevant Minister. 
  • However, as in previous years, Treasury requires that agencies provide financial information by dates earlier than the statutory deadlines. 
  • Those dates are set out in:
    • Early Close procedures:
    • TD 19-02 Mandatory Early Close as at 31 March each year,
  • TPP 19-08 Agency Direction for the 2019-20 Mandatory Early Close
  • Mandatory Annual Return procedures:Agency Direction for the 2019-20 Mandatory Annual Returns to Treasury (to be issued shortly

For questions concerning the above, please contact Agencyinfo@treasury.nsw.gov.au 
 

  • Treasury had planned for certain GSF Act Part 7 financial reporting provisions to commence on 1 July 2020 and accordingly, first apply for the 2019-20 financial year. 
  • Treasury now plans for commencement of those GSF Act provisions on 1 July 2021 and accordingly to first apply for the 2020-21 financial year. 
  • An updated GSF commencement timetable is available on the GSF website.

Special Deposits Account (SDA)

Monies held in an account within the SDA are one exception to the general rule that all public monies form one Consolidated Fund (s. 39 of the Constitution Act 1902).

These accounts exist for the purpose(s) specified in the legislation which establishes the account. If that purpose has been fulfilled, or the SDA account is otherwise no longer needed, then the SDA account should be dissolved.

To dissolve an SDA account requires an amendment to the legislation which establishes it. Any monies remaining in the SDA account would be paid into the Consolidated Fund, unless the amending legislation provides otherwise.

If you wish to dissolve an SDA account, or you require further information, please contact your Policy and Budget analyst and your legal advisors. 
 

An account within the SDA is akin to a ledger account. It is not essential to have a separate bank account for an account within the SDA. However, the responsible manager for the account must maintain accounting records that are sufficient to prepare financial reports concerning the account. (s.7.8 of the GSF Act).

There is one Special Deposits Account (SDA) and it is defined at section 4 of the PF&A Act. The SDA will continue under the GSF Act when section 4.15 is commenced.  The SDA is comprised of separate accounts of money. Statutory SDA Accounts may be established under legislation other than the GSF Act or the PF&A Act. Working Accounts could

be established under section 13A of the PF&A Act (or section 4.17 of the GSF Act when commenced).
Functionally, the two accounts of money within the SDA are very similar. In both instances there are criteria for what can be paid into and out of the account, investment powers relating to the money in the account, who administers the account, etc.

However, a statutory SDA account and a working account  are established quite differently. A statutory SDA account is established by a specific statute.  By contrast, it is the Treasurer (under section 13A of the PF&A Act) who has the power to establish a working account.  Sections 4.15 and 4.17 are intended to commence on 1 July 2019.
 

Delegations

No. Thresholds are set by the delegator in the instrument of delegation.

Generally, the response to this question will depend on the terms of the contract and the circumstances of each case.

The below should be followed:

  • Section 5.5(1) of the GSF Act requires the Accountable Authority of an agency to ensure that expenditure of money for a GSF agency is in a way that is authorised.
  • Section 5.5(2) provides that a government officer must ensure that the officer’s expenditure of money for the State or a GSF agency is done in a way that is authorised. 
  • An accountable authority is also a government officer and would, therefore, be subject to this obligation in section 5.5(2).

Expenditure of money is authorised if it is done “in accordance with a delegation or subdelegation from a person with power regarding the expenditure of money” or “under the authority of [the GSF Act] or any other law”. 

“Expenditure of money” includes (s. 1.4  GSF Act):

  1. the commitment of money for expenditure, and 
  2. the incurring of expenditure and the making of payments, and 
  3. the making of payments. 

For a multi-year contract, the officer would be “committing” for expenditure on entry into the contract the total amount payable over the term of the contract. However, this may not necessarily be the answer in every case where a multi-year contract is concerned, and would depend on the terms of the contract. 

Accordingly, the officer must have a financial delegation for the total amount payable over the term of the contract, authority to enter into the contract, and the appropriation limit must not have otherwise been reached by expenditure in the relevant financial year. 

Please consider obtaining legal advice within your agency or joint formal advice with Treasury from the Crown Solicitor’s Office.
 

By broadening the scope and providing clarity to delegations and subdelegations, the GSF Act provides a framework enabling the Treasurer, Ministers, Accountable authorities and government officers to devolve decisions concerning financial management where they believe it is optimal to do so.

For example, a new capacity to authorise subdelegation for many functions empowers a Minister to choose what they wish the Accountable Authority to manage rather than having to authorise delegations for the entire agency. An appropriation expenditure function relates to expenditure of money from the Consolidated Fund under the authority of an appropriation (provided by an Annual Appropriation Act, the GSF Act or any other Act). A Minister delegating (under Division 9.2 GSF Act) an appropriation expenditure function may impose terms and conditions on the delegation and also on any subdelegation (section 5.2 of the GSF Act). 

Where no action has been taken in relation to agency delegations since the commencement of the GSF Act, transitional provisions provide that certain delegations continue in force (refer to clause 12 in Schedule 1 to the Government Sector Finance Act 2018).

For further information on delegating and subdelegating functions under the GSF Act refer to the Delegating roles and responsibilities fact sheet.
 

An excluded function is a function which may not be delegated or subdelegated by a Minister, GSF agency that is a person, or an Accountable Authority.

Sections 9.8 (Delegations by Treasurer of certain functions) and 9.9 (Delegations by Ministers) of the GSF Act generally provide that a function may be excluded from subdelegation by the Treasurer’s, or other Minister’s, delegation instrument (or their delegate’s instrument). Therefore, whether a function is an ‘excluded function’ or not, refers to a function a Minister (or their delegate) excludes from being delegable. For the Treasurer, a function excluded from being subdelegated  also includes a function concerning the giving of Treasurer’s directions unless authorised by the Treasurer in the Treasurer’s instrument of delegation.

For all Ministers, a function under Division 9.1 (Information sharing) of the Act cannot be subdelegated.

For the purposes of section 9.10 (Delegations by GSF agencies that are persons), the section specifically refers to an “excluded function”.
In that section, an excluded function is:

  • (a)  any function of a kind prescribed by the regulations as an excluded function, or
  • (b)  for a GSF agency that is not a separate GSF agency—any other kind of function that the responsible Minister for the agency has directed in writing cannot be delegated. 

Also, a function may not be subdelegable under the section, where it is excluded from subdelegation under a delegation instrument, or, where the responsible Minister for the agency has directed in writing that it cannot be subdelegated.

Section 9.11 (Delegations by accountable authorities) specifically refers to an “excluded function”.
In that section, an excluded function is:

For a GSF agency 

  • (a)  any function of a kind prescribed by the regulations as an excluded function, or
  • (b)  for a GSF agency that is not a separate GSF agency—any other kind of function that the responsible Minister for the agency has directed in writing cannot be delegated. 

For a university or its controlled entities  

  • (a)  any function of a kind prescribed by the regulations is an excluded function.

Also, a function may not be subdelegable under the section, where it is excluded from subdelegation under a delegation instrument, or, where the responsible Minister for the agency has directed in writing that it cannot be subdelegated .
 

Authorisation

The Accountable Authority, via policies and procedures, and government officers must ensure that expenditure of money is in a way that is authorised.

For the expenditure to be authorised it must be done:

  • in accordance with a delegation or subdelegation from a person with power regarding the expenditure of money, or
  • under the authority of the GSF Act or any other law.

In relation to expenditure of money where authorisation is by delegation or subdelegation, the delegation (including thresholds) are set by the delegator. You should refer to your agency’s delegations manual and policies and procedures for who may authorise expenditure and how expenditure should be authorised.

Where no action has been taken in relation to agency delegations since the commencement of the GSF Act, transitional provisions provide that delegations continue in force. (Refer to clause 12 Schedule 1 Government Sector Finance Regulation 2018)

Where your practices comply with sections 12, 12A and 13 of the Public Finance and Audit Act 1983 (PFA 1983) those practices would generally be consistent with the requirements of the GSF Act. 

The GSF Act provides an opportunity for your agency to update your financial management practices and policies, including:

  1. updating your delegations, and 
  2. streamlining your expenditure processes. 

Additional information: Expenditure of money from the Consolidated Fund and delegations  

Under the GSF Act, for expenditure of money from the Consolidated Fund , a Minister delegating an appropriation expenditure function may impose terms and conditions on the delegation and also on any subdelegation. For an officer delegated or subdelegated an appropriation expenditure function they must be appropriately authorised with a valid delegation and they must exercise that function in accordance with the terms and conditions set by the Minister (if any).

For further information refer to the Expenditure and Delegating roles and responsibilities fact sheets. Section 5.2 and 5.5 GSF Act.

Authorisation of expenditure of monies under GSF Act - overview

Sections 5.5(1) & 5.5(2) of the GSF Act require that expenditure by accountable authorities and government officers must be authorised.  

Expenditure of monies under the GSF Act (s1.4) includes:
a)    The commitment of money for expenditure 
b)    The incurring of expenditure 
c)    The making of payments. 

Expenditure of monies is authorised under the GSF Act (s5.5(3)) if it is done:
a)    in accordance with a delegation or subdelegation from a person with the power regarding the expenditure of money, or
b)    under the authority of the GSF Act or any other law.

Authorisation for when agencies enter into a shared service arrangement, whereby shared service provider makes a payment to a third party on behalf of the agency – how does s5.5. apply to shared service providers?

It is common for agencies and Departments to enter into shared service arrangements with providers that require the provider to make payments to a third party (e.g. agency employees) on behalf of agency or Department.

These types of arrangements generally incorporate two points of expenditure of monies (see figure below), both of which are required to be authorised pursuant to the GSF Act. 

That is, the Accountable Authority for the GSF Agency (or a government officer of a GSF Agency) who enters into the shared service arrangement (see figure point 1), is responsible for ensuring any expenditure of monies under that arrangement (see figure point 2) is authorised. 

For example, the authorisation for any expenditure under the arrangement may be included in a delegation or subdelegation instrument from a Minister or Secretary (holding an appropriation under an Annual Appropriation Act) to the relevant government officer. 

authorisation

The above information is provided as general guidance only. If you have any further queries, please contact the Legislation Reform team in NSW Treasury  with specific details about the nature of shared service arrangements in your Department. You may also wish to consult the legal counsel in your Department for advice on how to ensure compliance with s5.5 of the GSF Act, for the specific nature of shared service arrangements in your Department.

Financial management policies and procedures

This is a new requirement under section 3.6(1)(a) of the GSF Act. Agencies will likely maintain an accounting manual, as this was required by section 11(3) of the Public Finance and Audit Act 1983 (PFAA) Act), now repealed.

The Accountable Authority is required to determine whether their agency’s existing financial management policies and procedures in its accounting manual are sufficient for the GSF Act. The GSF Act requirements also include establishing, maintaining and keeping under review:

  • the agency’s risk management, internal control and assurance processes; and
  • arrangements for protecting the integrity of financial and performance information.

These requirements are also similar to the internal control and audit requirements under the PFAA Act.

Treasury has previously issued the following mandatory policies and guidance:

  • TPP15-03 Internal Audit and Risk Management Policy
  • TPP16-02 Shared arrangements for Audit and Risk Committees
  • TPP17-08 Requirements for issuing, managing and reporting instruments of assurance
  • TPP12-03 Risk management toolkit (3 Volumes)
  • TPP17-06 Certifying the effectiveness of internal controls over financial information

If an agency adheres with the above policies, the Accountable Authority will comply with their obligations regarding financial management policies and procedures under the GSF Act.

The Accountable authority will also need to comply with any Treasurer’s directions and regulations issued in relation to section 3.6(1) of the GSF Act. Treasurer’s directions will be circulated as they are issued and will be published on the NSW Legislation Website and the NSW Treasury Website.

Examples of financial management policy and procedures 

Below is a list of financial management policies which an agency may be expected to satisfy section 3.6 of the GSF Act.

Table
 

Existing Treasury Circulars and Treasury Policy Papers remain intact (references to previous legislation need to be updated, however you may refer to mapping documents of the previous legislation to the GSF Act here).

Where a Circular or Policy Paper was issued as a Treasurer’s direction under the PFAA, these may still be followed as government policy until advised otherwise.

Treasurer’s directions will now be issued under the GSF Act.

Moving forward, this does not limit Treasury’s ability to issue Circulars and Policy Papers as previously.

GSF agency and government officers

The separately named entities, such as the NSW Police Force and TCorp, and the NSW Health entities were included in the definition of a GSF agency to reflect sector nuances.

These entities do not fall neatly within the other categories in the definition of a GSF agency in section 2.4 of the Government Sector Finance Act 2018 (GSF Act).
 

If required, a GSF agency may prescribe volunteers, consultants and contractors as government officers in the GSF Regulation (under section 2.9(1)(e) of the GSF Act).

Contact your Treasury Customer Relationship Lead for more information regarding prescribing entities as government officers.
 

If an agency wishes to have entities or persons prescribe as a GSF agency or government officer (respectively) in the GSF Regulation, they should follow these steps:

  1. Refer to the Key Concepts in Part 2 of the GSF Act
  2. Refer to the Prescribing GSF agencies for the purposes of the GSF Act fact sheet
  3. If you think the guidelines apply to your circumstance, or you have further questions, you can email legislation@treasury.nsw.gov.au

Civil recovery

There are similar provisions in section 60 and 61 of the PF&A Act. You may refer to the mapping documents for maps from the GSF Act to previous legislation and from the previous legislation to the GSF Act here.

The GSF Act provides a clear delineation between criminal offences under criminal law, and civil offences. Under the GSF Act, serious breaches of the GSF Act will be dealt with through civil recovery arrangements instead of being treated as criminal offences.

The GSF Act does not contain any criminal offence provisions, but breaches will instead rely on existing provisions in the Crimes Act and other applicable legislation. For example, theft of government resources, or fraud resulting in a loss of government resources, will be dealt with under existing and well-established offences in statute and at common law. Breaches may also be dealt with by way of employment sanctions, including those available under the Government Sector Employment Act 2013 or through employment contracts.
 

Performance information

Treasury will routinely publish performance information requested from GSF agencies where that information relates to State Outcomes. This information will be published in the annual budget. Treasury will not otherwise routinely publish performance information requested from GSF agencies.

Last updated: 28/05/2020