Banking
The Act establishes three types of bank accounts:
- Crown Bank Accounts to be used for all Crown revenue and Crown payments
- Departmental Bank Accounts to be used for departmental revenue and departmental payments, and
- Trust Bank Accounts to be used solely for trust money.
What is public money?
“Public money” is defined in the Act as meaning:
- all money received by the Crown, including the proceeds of all loans raised on behalf of the Crown, and
- any other money that the Minister or the Secretary directs to be paid into a Crown Bank Account or Departmental Bank Account, and
- any money held by an Office of Parliament.
Public money does not include money held in trust as trust money or money received and held by Crown entities.
The Act also permits the Treasury to issue instructions for matters such as regulating the collection, control and spending of public money or trust money.
Crown Bank Accounts
Under the Act all Crown revenue (that is, revenue that is not departmental revenue) must be paid directly into a Crown Bank Account (section 65U(3)). Each department collecting money on behalf of the Crown is therefore required to deposit this money in a specified Crown Bank Account.
Treasury Instructions govern the payment of money from Crown Bank Accounts. Amongst other things, departments making payments on behalf of the Crown (including refunds of Crown revenue) are to make such payments from a Crown Bank Account approved by the Treasury for that purpose and comply with any Notice of Delegation Regarding Crown Bank Accounts issued by the Treasury. Departments making payments from Crown Bank Accounts are required to maintain records of all such transactions and operate systems of internal control in respect of such payments.
All Crown Bank Accounts are the responsibility of the Treasury (section 65R). Where departments have delegated authority to operate Crown Bank Accounts they are required to observe the terms and conditions of the delegation.
The Treasury transfers funds into each Crown Bank Account in accordance with the cash payment schedule for that bank account. The timing of clearing those Crown Bank Accounts that receive Crown revenue to accounts operated by the New Zealand Debt Management Office is determined on a case-by-case basis depending on the number and amount of receipts.
Departmental Bank Accounts
Departmental Bank Accounts are primarily the responsibility of departments. However, Departmental Bank Accounts may only be opened with the approval of the Treasury and may only be operated in accordance with terms and conditions set by the Treasury or the Minister.
The Act requires that the following money be paid into a Departmental Bank Account:
- disbursements from the Treasury – Such disbursements represent the cash component of expenses and capital expenditure authorised by Parliament, and are disbursed in accordance with the cash payment schedule negotiated with the Treasury prior to the commencement of each financial year
- receipts relating to departmental revenue, and
- receipts from the sale or disposal of assets (section 65U(2)).
Foreign Currency Bank Accounts
The Act does not refer to Foreign Currency Bank Accounts. However, as the Treasury is responsible for regulating the operation of bank accounts it is also responsible for granting approval to open a Foreign Currency Bank Account (departmental or Crown). Departments operating a Foreign Currency Bank Accounts must do so in accordance with any relevant notice of delegation.
Monitoring spending
Money may not be paid out of a Departmental Bank Account or a Crown Bank Account except in accordance with an appropriation or other authority by or under an Act (section 5 and section 65V(1)). The Treasury is responsible for monitoring and reporting on any expenses or capital expenditure incurred without appropriation or statutory authority (section 65Y). Refer to Chapter 2 for further discussion of this responsibility.
As noted in Chapter 2, the Act requires that the Treasury supply monthly statements from September of each year to the Auditor-General, to enable the Auditor-General to examine whether expenses and capital expenditure have been incurred in accordance with an appropriation or other authority such as imprest supply. The Auditor-General can also request information under the Public Audit Act 2001.
If the Auditor-General has reason to believe that expenses or capital expenditure have been incurred for a purpose that is not lawful or is not properly authorised, the Auditor-General can require that the relevant Minister report to the House of Representatives on the alleged breach. The Auditor-General also has the power to stop payments from a Crown Bank Account or a Departmental Bank Account.
Regulations and instructions
The Act provides for instructions (by Treasury and the Minister of Finance) and regulations to be issued in respect of specified matters (sections 80, 80A and 81). Some of these matters have been highlighted in Chapter 5 and other Chapters. For example, the Treasury may issue instructions to ensure that entities within the Government reporting entity use consistent accounting policies (section 80(1)).
Regulations and instructions are used to limit the amount of detail in the legislation and to enable a more timely response when changes are required.
Treasury Instructions can be accessed on the Treasury’s website [www.treasury.govt.nz/publications/guidance/instructions]. At the time of writing the Minister of Finance had not issued any instructions. Regulations are available online at www.legislation.govt.nz.
