Commitment of Relevant Money (RMG 400)

Entering arrangements and committing relevant money

This page is about requirements when an official enters an arrangement or commits relevant money.

An official might enter an arrangement or make a commitment when they are spending money.

There are different requirements for officials of non-corporate Commonwealth entities and corporate Commonwealth entities and for different types of arrangements.

RMG 400 - Commitments of relevant money provides additional guidance.

What is a commitment of relevant money?

Relevant money is money standing to the credit of any bank account of a Commonwealth entity, or money that is held by a Commonwealth entity.

Relevant money is ‘committed’ when a Commonwealth entity undertakes an activity that results in an obligation to pay relevant money.

A common way to commit relevant money is by entering into an arrangement.

What is an ‘arrangement’?

An arrangement includes a contract, agreement, deed or understanding. An arrangement also includes any other instrument between parties that creates rights and obligations.

The type of arrangement that an entity enters into will determine the legislation, rules and policies that will apply (in addition to the PGPA Act), for example:

  • Commonwealth Procurement Rules (CPRs) and associated procurement policies will apply to procurement (buying) arrangements
  • Commonwealth Grants Rules and Guidance (CGRGs) will apply to grants arrangements.

Non-corporate Commonwealth entities

What do I need when entering into an arrangement involving the commitment of relevant money?

Legislative authority

Officials must have legislative authority to enter into arrangements involving the commitment of relevant money.

Legislative authority can come from:

  1. Public Governance, Performance and Accountability Act 2013 (PGPA Act)
    • Section 23
    • Accountable authorities of non-corporate Commonwealth entities
    • Arrangements relating to the affairs of the entity and the ordinary activities of government
  2. Financial Framework (Supplementary Powers) Act 1997 (FF(SP) Act)
  3. Other legislation
    • For arrangements covered by another legislative scheme.

Accountable authorities can delegate legislative authority to officials.

Delegated legislative authority

An accountable authority can delegate the legislative authority in the PGPA Act and the FF(SP) Act to:

  • officials in their entity
  • officials of another non-corporate Commonwealth entity.

Officials must comply with any directions or instructions accompanying a delegated power.

Both accountable authorities and officials must comply with the duties under the PGPA Act.

Written records of approvals to commit relevant money

Officials who approve a commitment of relevant money must record it in writing.

Officials may verbally approve a commitment of relevant money but must record it in writing as soon as practicable after giving it.

Your Accountable Authority's Instructions (AAIs) may set out requirements for recording approvals to commit relevant money.

There are additional requirements for documenting approvals under the:

  • Commonwealth Grants Rules and Guidelines (CGRGs), e.g. officials must record the basis for the approval of a grant
  • Commonwealth Procurement Rules (CPRs), e.g. officials must record the procurement requirements and process, value for money considerations, approvals and decisions.

Corporate Commonwealth entities

Corporate Commonwealth entities get authority to enter into arrangements and commit relevant money from their enabling legislation and from their body corporate nature.

An accountable authority of a corporate Commonwealth entity may be able to delegate, or authorise officials to exercise, the power to enter into arrangements under the CCE’s enabling legislation.

Officials must comply with any directions accompanying a delegated power.

Both accountable authorities and officials must comply with the duties under the PGPA Act.

Written records of approvals to commit relevant money

Officials can verbally approve a commitment of relevant money.

Officials must make a written record of the approval as soon as practicable after giving it.

There are additional requirements for documenting approvals under the:

  • Commonwealth Procurement Rules (CPRs), e.g. officials must record the procurement requirements and process, value for money considerations, approvals and decisions.

Ministers

A minister can approve a proposed expenditure of relevant money providing they:

  • are satisfied, after making reasonable inquiries, that it is a proper use of money
  • record the terms of the approval in writing.

If the proposed expenditure relates to a grant, then there are additional requirements that ministers must comply with in the Commonwealth Grants Rules and Guidelines.

 

 


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