CASH MANAGEMENT IN THE COMMONWEALTH

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As part of the accrual budgeting framework, implemented from 1 July 1999, agencies are responsible for the efficient, effective management of their departmental and administered appropriations. A component of this reform was to devolve banking arrangements to agencies and to encourage them to improve their cash management practices. Finance worked cooperatively with agencies throughout the year to assist them in this aim.

DEPARTMENTAL
FMA AGENCIES SPLIT BETWEEN CASH AND TERM DEPOSTIS (June Average)

FMA Agencies Split Between Cash and Term Deposits (June Average) The graph depicts cash management in the Commonwealth by comparing the percentage of monies held in the Official Overnight Account and the Official Term Deposit Account in 1999-2000 and 2000-01 inclusive.

The average aggregate balance of departmental cash and term deposits held by agencies over the course of the financial year was $2.8 billion, which as a percentage of total turnover compares favourably with practices in both the Australian and US corporate sectors. As well, agencies have reacted well to the banking incentives as shown in the graph to the left, by the shift toward term deposits over the course of the year.

ADMINISTERED
AGGREAGATE DAILY ADMINISTERED CASH BALANCE

Aggregate Daily Administered Cash Balance The graph depicts the aggregate daily administered cash balance for the Commonwealth in the four quarters of 2000-01 and also shows the position of minus and plus one standard deviation. The graph on the left demonstrates a sharp downward movement in aggregate daily administered cash balances. The volatility of administered cash holdings has also reduced. These improvements reflect a number of factors, including agencies improving their cash management practices and a more proactive monitoring role by Finance. These improvements should allow the Commonwealth more flexibility in determining an investment strategy, resulting in a greater yield from investments.

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