The Commonwealth's financial transactions and the accounting
for those transactions have changed greatly since Federation. In the past
twenty years in particular there have been significant changes in the way that
the executive government presents its budget to the parliament for approval and
in the way in which it accounts for past expenditure.
The Commonwealth Government adopted accrual accounting in 1997
and in 1999-2000 for the first time presented a budget based on accrual
accounting principles. In that budget the Government also adopted an outcomes
and outputs reporting framework.
The Committee considers that the adoption of accrual accounting
and budgeting has the potential for enhancing the management of the
Commonwealth's funding and expenditure and has done so to an extent.
Nevertheless, accrual budgeting and especially the associated outcomes and
outputs framework, while resulting in some improvements in transparency, have
posed challenges for Parliament's control of the appropriations processes.
The Senate required the Committee to inquire into a number of
specific matters under the general reference on the transparency and
accountability to Parliament of Commonwealth funding and expenditure. These
specific matters included the impact of outcome budgeting, multiple sources of
funding and the use of ordinary annual services to fund activities, including
non-annual services, on the Parliament's ability to scrutinise, approve and
monitor proposed and actual expenditure. The Committee was also required to
recommend options for improving the transparency and specificity of the budget
documents, and to propose other measures to improve the Parliament's oversight
of proposed and actual Commonwealth funding and expenditure.
The Committee has made several recommendations and a number of
suggestions in all these areas which, if adopted, would go some way to
restoring the Parliament's constitutional and historical prerogatives with
regard to the control of the Executive's funding and expenditure.
With regard to multiple sources of funding, the Committee has
made recommendations for the production of a separate document setting out past
and expected expenditure from special appropriations; for the tabling of
topical information about the transfer of funds from one form of appropriation
to another; for the return of net appropriations to appropriation bills; and
for limiting the amounts of unspent appropriations. The Committee has also made
recommendations in relation to the inclusion of new items of expenditure in the
With regard to possible improvements to the budget documents
the Committee has recommended that transparency and specificity could be
improved by changes such as the presentation of financial data at the program
level; by better specification of outcomes; by including data for forward years
at the outcome and output levels in the Portfolio Budget Statements; and by the
adoption of one agreed accounting standard.
The Committee has concluded that Parliament's oversight of
proposed and actual public funding and expenditure could be improved by changes
within the Senate committee system, such as more specific monitoring of the
financial reports of the government by Committee Office staff, and by the
Executive ensuring that the Appropriation bills are drafted so that
departmental expenditure must be against an outcome or purpose set down in the
bills. The Committee has also agreed with a number of suggestions made by the
Auditor–General on specific measures the Audit Office could take to assist
Senate committees with the consideration of estimates.
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