Developing other CRF arrangements
The Public Governance, Performance and Accountability Act 2013 (PGPA Act) provides a mechanism for non-corporate Commonwealth entities (NCE) to engage a person or organisation outside of the Commonwealth (agent) to use or manage money belonging to the Commonwealth on behalf of the Commonwealth (section 105 of the PGPA Act and section 29 of the PGPA Rule). For example, the other CRF money arrangement can cover:
- an agent selling Commonwealth property on behalf of the Commonwealth, receives the purchase price and holds the money before remitting it to the Commonwealth or
- an agent collecting levies or fees payable to the Commonwealth under legislation.
In these examples the agent receives and holds money that belongs to the Commonwealth, generally for short periods of time, before remitting the money to the Commonwealth.
The arrangement or contract with the agent must meet the requirements in section 29 of the PGPA Rule.
The PGPA Rule goes to:
- promoting proper use and management of the other CRF money.
- documenting arrangements in writing.
- requiring the depositing of the other CRF money into a bank as soon as practicable.
- requiring the other party to keep accurate records of how the other CRF money is received, managed, and spent and allowing these records to be easily and properly audited.
- requiring that any interest earned on the other CRF money is fully sent to the Commonwealth, with clear rules on when and how often this must happen.
- specifying the timing and frequency for sending the other CRF money to the Commonwealth.
- specifying the timing and frequency for making any payments of the other CRF money to others as required.
When applying the requirements of section 29, officials should also consider:
- keeping detailed records of the use of other CRF money to ensure accountability, transparency, and to minimise risks.
- the Commonwealth and the Commonwealth Auditor-General generally have the right to access all records. Records may also need to be accessible for freedom of information requests.
- remitting any interest earned on the other CRF money to the Commonwealth in full is intended to achieve the best cash outcome for the Commonwealth. This approach balances the need to minimise risks and encourages keeping the money in an external bank account for the shortest reasonable period.
An official who has the power to enter into other CRF arrangements must exercise that power with the degree of care and diligence that a reasonable person would exercise in the same position and act honestly, in good faith and for a proper purpose (sections 25 and 26 of the PGPA Act). This means being aware of and complying with the directions or instructions of their accountable authority, including to promote the proper use and management (that is, efficient, effective, economical and ethical) of other CRF money by persons outside the Commonwealth.
Other CRF arrangements cannot be used to ‘outsource’ obligations under the PGPA Act and PGPA Rule (for example, obligations to report on procurements or grants) to a third party.
The PGPA Rule (section 29) establishes minimum requirements (for control, accountability and transparency) that must be included in all other CRF money arrangements.
Some things an official can consider before entering into an other CRF money arrangement are:
- whether a suitable person or organisation will handle other CRF money. For example, is the person or organisation:
- well established with a strong reputation for probity
- capable of satisfying entity reporting requirements
- financially viable with little risk of insolvency
- able to demonstrate robust internal procedures and processes for the handling of money.
- will the arrangement provide value for money (noting that generally, the greater the value, the higher the potential risk to the Commonwealth)
- which rules, government policies or decisions will need to be incorporated into the arrangement (for example, relevant obligations in the Commonwealth Grants Rules and Guidelines or Commonwealth Procurement Rules – noting that some requirements, such as reporting on AusTender, cannot be managed or fulfilled by a person outside the Commonwealth; therefore it would not be practicable to require a person outside the Commonwealth to do this)
- whether subcontracting will be permitted and, if so, what controls will be put in place
- the potential for misuse or mismanagement of the money (section 10 of the PGPA Rule and RMG 201: Preventing, detecting and dealing with fraud and corruption)
- which appropriation(s) will be debited and credited in relation to payments and receipts, and when
- the complexity of transactions, and the level of difficulty to manage them
- the period, or periods, of time that the person will be handling other CRF money
- the duration of the arrangement (it is encouraged that an individual arrangement not last more than 5 years)
- termination of the arrangement (NCEs often include clauses that allow for termination at any time, taking into account changes in government decisions)
- the risk of an apparent or actual conflict of interest arising
- whether the transactions may be contentious (for example, act of grace payments)
- the application of other relevant Commonwealth legislation and the laws of other jurisdictions
- any other risks associated with having a person outside the Commonwealth handle other CRF money.
The collection and expenditure of other CRF money will need to be credited and debited to an existing appropriation. It is important an entity is able to accurately identify which appropriation will support an other CRF arrangement. For cases where no appropriation exists, section 105(3) of the PGPA Act provides a special appropriation for the expenditure of other CRF money arrangement. This is a very limited appropriation that is only available if:
- the expenditure is in accordance with any requirements in the PGPA Rule
- the Finance Minister is satisfied that the expenditure is not authorised by another appropriation. The Finance Minister has not delegated this power.
Legal authority to enter into other CRF money arrangements
The power for the accountable authority of a NCE to enter into, vary or administer an arrangement generally comes from legislation:
- section 23(1) of the PGPA Act
- section 32B of the Financial Framework (Supplementary Powers) Act 1997 or
- other specific legislation.
The accountable authority can delegate this power to enter into arrangements to officials in the NCE, and may or may not include directions in that delegation. Officials must not enter into, vary or administer any arrangements unless they are authorised to do so.
For more information on entering into, varying or administering an arrangement, see RMG-400: Approving commitments of relevant money.
