CEI 3.2 Payment of Accounts

1. Scope of these instructions

These Chief Executive's Instructions (CEI) outline the policy for the payment of accounts, including through corporate credit cards, and the exercising of drawing rights by the department. Additional information on this CEI is available in the document "All about payment of accounts" and supporting finance policies and procedures.

2. Policy principles

• all administered and departmental payments must comply with the provisions of the Financial Management and Accountability Act 1997 (FMA Act), relevant Appropriation Acts and legislative requirements applying to the fund from which the payment is made.
• all procurement must comply with the CEI 3.1 - Procurement and associated policies, procedures and guidelines.
• an official must not enter into an arrangement that commits public money unless a spending proposal has had prior approval from a FMA Regulation 9 approver and, if required, the Chief Finance Officer has provided FMA Regulation 10 approval.
• terms and conditions negotiated for the payment of claims to suppliers must demonstrate prudent cash management benefits for the Commonwealth.
• all claims for payment are to be paid by the due date specified in the agreement for payment with the supplier. Where no due date is specified, payment is to be made within 30 days of acceptance of the goods/services and the receipt of a correctly rendered invoice, whichever is the later
• all payments must be recorded and accounted for in the department's financial management information system, QSP.
• payments of public money directly from the department's bank accounts must be authorised by an official with a valid drawing right as issued by the Chief Finance Officer.

3. Target audience

This CEI is applicable to all officials in the department.

4. Departmental instructions

4.1 Responsibilities

Officials must:

• obtain prior written or verbal FMA Regulation 9 approval for all spending proposals. All verbal approvals must be followed up in writing within 14 calendar days
• only make a payment of public money directly from the department's bank accounts when authorised by a valid drawing right as issued by the Chief Finance Officer. This generally applies to Human Resources and Finance staff only.

FMA Regulation 9 approvers must:

• satisfy themselves, after making reasonable enquiries, that approving the spending proposal would be a proper use of Commonwealth resources as per section 44 of the FMA Act and is in accordance with the policies of the Commonwealth including the Commonwealth Procurement Guidelines and/or the Commonwealth Grant Guidelines.
• ensure funds are available prior to approving any spending proposal.
• ensure they do not exceed the limitations placed on their spending power.
• ensure their decisions are recorded and their approval is obtained prior to entering into an arrangement to spend public money. If approval of a spending proposal is verbal, the delegate must record the terms of the approval in writing within 14 calendar days.

Reviewing officers must:

• provide an independent review that the payment is valid and approved.
• not be the same official who prepared the claim for payment.
• confirm that documented evidence of prior spending approval has been obtained for all claims for payment.

Branch Heads / General Managers / Regional Managers must:

• appoint reviewing officers
• maintain a list of reviewing officers for their branch / business area.

4.2 Drawing rights

• are required for officials to make payments from the department's bank accounts.
• provides the statutory mechanism to control the payment of public money and the use of appropriation.
• are issued, amended or revoked by the Chief Finance Officer.

4.3 Grants

• the Commonwealth Grant Guidelines impose additional requirements for the department when seeking the minister's / parliamentary secretary's approval of grant spending proposals.
• all grant commitments and payment requests must be processed (or manually recorded) in the department's Grants Management System (Clarity) which downloads data into QSP.

4.4 Allocated officials and outsiders

• when performing a financial task on behalf of the department, an individual becomes an allocated official of the department under FMA Regulation 4(1)(a)
• an outsider is not regarded as a departmental official, and subsequently for the purposes of section 12 of the FMA Act may not enter into an agreement or arrangement for the payment of public money. Only the secretary and the Chief Finance Officer may provide section 12 delegation to outsiders.

4.5 Record keeping

• accounts and records relating to claims for payment 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 under 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 provisions 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 12, 26, 27, 28, 30, 44, 48)
• Financial Management and Accountability Regulations 1997 (Regulations 4, 7, 7a, 8, 9, 10, 12)
• Financial Management and Accountability (Finance Minister to Chief Executives) Delegation (as amended)
• Public Service Act 1999 (Section 13)

6.2 External guidance/instruction

• Finance Circular 2011/05 – Chief Executive's Instructions
• Finance Circular 2011/01 – Commitments to spend public money (FMA Regulations 7 - 12)
• Finance Circular 2009/07 – Issuing and Exercising Drawing Rights
• Finance Circular 2004/14 – Discounts for Prepayment and Early Payment
• Commonwealth Procurement Guidelines

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 3.1 – Procurement
• CEI 3.3 – Grant management
• CEI 3.4 – Official travel
• CEI 3.5 – Corporate credit card
• CEI 4.1 – Official bank accounts
• CEI 4.2 – Receipting and custody of public money
• CEI 5.2 – Settlement of legal claims
• CEI 5.3 – Discretionary compensatory schemes

7. Definitions

Change History