CEI 4.3 Debt and Loan Management

1. Scope of these instructions

These Chief Executive’s Instructions (CEI) outline policy on debt and loan management. Additional information on this CEI is available in the document All about Debt and Loan Management and supporting finance procedures.

2. Policy principles

• Debts owing to the Department of Agriculture Fisheries and Forestry (the department) are to be brought to account as soon as they are identified and collected promptly in full.
• Recovery of each debt must be pursued for which the department is responsible.
• Loans and repayment arrangements are to be managed in accordance with formal agreements.
• Allowances for doubtful debts are to be provided for and reported in the department’s financial statements.

3. Target audience

This CEI is applicable to all officials in the department.

4. Departmental instructions

4.1 Responsibilities

Officials must:

• notify the Accounts Receivable Team as soon as they become aware of any new debt which has been incurred
• notify the Human Resources Branch if they suspect an overpayment of an allowance has occurred
• notify the Human Resources Branch if they have any outstanding debts, prior to them ceasing employment with the department.

Supervisors must:

Notify Human Resources Branch of any debt generated by their employees.

Program Managers must:

• seek approval from a delegate for the remission of debt
• forward any remission requests to the Accounts Receivable Team
• recommend submissions for write-off to the Accounts Receivable Team
• provide timely advice to the Accounts Receivable Team in relation to debt recovery action.

The Human Resources Branch must:

• initiate recovery action of employee debt in a timely manner
• establish repayment arrangements through the payroll system for employee debt. Where unable to do so debt must be referred to the Accounts Receivable Team to ensure invoices are raised.

Chief Finance Officer must:

• consider the legal recoverability of debt and approve write-off proposals as a delegate under section 47(1) in the Financial Management and Accountability Act 1997 (FMA Act)
• approve all proposals for payment by instalment as a FMA s34(1)(c) delegate
• approve all proposals for payment by deferral as a FMA s34(1)(d) delegate
• approve departmental officials, if required by exception, to hold a FMA s47(1) delegation up to a maximum limit of $1 000. In these situations, the Chief Finance Officer must be advised in writing of the details of the debts that have been written off for financial reporting purposes
• first approve proposals for the waiver of debt prior to requests being made to the
  Finance Minister
• be provided with a copy of all approval proposals for the remission of debt.

4.2 Repayment arrangements

Payment by instalments

• The department may agree to accept the repayment of debt owing to the Commonwealth by instalment or deferral.
• All proposals for payment by instalment must be approved by an officer holding
  FMA s34(1)(c) delegation prior to the client being informed.

Deferral of payment

• The department may agree to accept the deferral of payment of debt owing to the Commonwealth.
• All proposals for payment by deferral must be approved by an officer holding FMA s34(1)(d) delegation prior to the client being informed.

4.3 Write-off of debt

• All debt to be written-off must be approved by the Chief Finance Officer.
• In determining the appropriateness of the write off of debt the Chief Finance Officer will consider, under section 47(1) of the FMA Actthe legal recoverability of the debt and/or whether the debt is economical to pursue.
• Only the secretary, deputy secretary and Chief Finance Officer hold FMA s47(1) delegation.
• By exception, the Chief Finance Officer may approve departmental officials to hold a
  FMA s47(1) delegation up to a maximum limit of $1 000. In these situations, the Chief Finance Officer must be advised in writing of the details of the debts that have been written off for financial reporting purposes.

4.4 Waiver of debt

• The waiver of debt prevents the Commonwealth from any future recovery of the debt.
• Only the Finance Minister may waive debt and this authority has not been delegated.
• All proposals for debt waivers must be first approved by the secretary or
  Chief Finance Officer prior to requests being made to the Finance Minister.

4.5 Remission of debt

• All proposals for remission must be approved by an officer holding the delegation to remit and a copy of approval must be provided to the Chief Finance Officer for financial reporting purposes.
• Advice should be sought from the department’s Corporate Legal Unit if there is doubt as to the operation of the applicable legislation:

a) Section 86E (2H) of the Quarantine Act 1908

b) Order 49 of the Export Control (Fees) Orders 2001

c) Regulation 6 of the Export Inspection and Meat Charges Collection Regulations 1985

d) Section 11 of the Export Inspection Charges Collection Act 1985.

4.6 Record keeping

Accounts and records relating to debts to the Commonwealth are to be maintained in accordance with section 48 of the FMA Act and retained by the department in accordance with the requirements of the Archives Act 1983, generally this is for a period of seven years.

5. Breaches

• Officials are bound by the APS Code of Conduct set out in section 13 of the Public Service Act 1999 and section ;44 of the FMA Act to use Commonwealth resources in an efficient, effective, economical and ethical manner. Officials who do not comply with this CEI may be found to be in breach of these requirements and sanctions may apply.
• Breaches of the FMA Act are reportable to the Department of Finance and Deregulation in the FMA Certificate of Compliance.

6. References

6.1 Legislation

• Financial Management and Accountability Act 1997 (sections 19, 34, 42, 47 and 48).
• Public Service Act 1999 (section 13).
• Financial Management and Accountability Regulations 1997 (Regulation 29).
• Financial Management and Accountability (Finance Minister to Chief Executives) Delegation (as amended).
  

6.2 External guidance/instruction

• Finance Circular 2011/05 – Chief Executive's Instructions
• Finance Circular 2009/09 – Discretionary Compensation and Waiver of Debt Mechanisms
• Finance Circular 2006/07 – Debts to the Official Administered Receipts Accounts

6.3 Internal guidance/instruction

• Finance Policies on MyLink.
• Corporate Finance training.

6.4 Related CEIs

• CEI 1.2 – Fraud control
• CEI 1.6 – Recordkeeping
• CEI 3.4 – Official travel
• CEI 4.1 – Official bank accounts
• CEI 4.2 – Receipting and custody of public money
• CEI 6.1 – Care and custody of public property

7. Definitions and Acronyms

Change History