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Machinery of Government changes: A guide

Key message

  • Accountable Authority Instructions
  • Annual Appropriations
  • Appropriation consideration
  • Assets and Liabilities
  • Average Staffing Level Cap
  • Audit Committees and Fraud Control Plans
  • Bank Accounts
  • CBMS – Cash Management module
  • CBMS – changes to estimates
  • CBMS – changes to structures
  • Charging Arrangements
  • Competitive Neutrality
  • Corporate Plan requirements
  • Delegation of Powers
  • Employee Leave Entitlements
  • Download of Financial Management
  • Information Systems
  • Financial Reporting arrangements
  • Grants
  • Insurance
  • Outcome Statements and Program
    - Structures
  • Procurement
  • Property Management/Leasing
  • Retained Entity Receipts
  • Relocation Costs
  • Special Accounts
  • Special Appropriations
  • Superannuation
  • Third Party Drawdown Access

1. Agencies are expected to implement change in a way that is consistent with the principles outlined in the Executive Summary.

Accountable Authority Instructions (AAIs)

2. The accountable authority of a non-corporate Commonwealth entity should establish internal controls to assist staff to comply with the requirements of the resources management framework. This may require establishing arrangements to apply the AAIs of an existing agency until the accountable authority is able to issue AAIs specifically for the transferred functions for the agency.

3. Finance has produced model AAIs as guidance for agencies. The model AAIs cover core topics that are applicable to the majority of officials in most agencies. For further information on the PGPA Act and the model AAIs see the Department of Finance website.

4. There may be value in a gaining agency picking up relevant parts of the AAIs of an agency in relation to matters that have been transferred. Similarly, a losing agency may no longer need AAIs on matters that have transferred to another agency.

Annual Appropriations

5. Where a function is transferred between non-corporate Commonwealth entities, the principle 'finances follow function' applies to the transfer of annual appropriations and special appropriations.  Transfers of annual appropriations will usually be through a section 75 determination, under the PGPA Act.

6. Note: Section 75 of the PGPA Act applies to transfers of functions between non-corporate Commonwealth entities. In relation to corporate Commonwealth entities (CCEs), as there are different situations that apply when transferring functions involving CCEs please contact the Annual Appropriations Team (annual.appropriations [at] finance.gov.au) within Finance in the first instance.

Appropriation consideration

7. Agencies should identify what appropriations are affected, such as to enable the new functions of an agency to start operating from the commencement date and how those appropriations can be accessed. This may include:

  • current year annual appropriations to be transferred - Appropriation Act No.s 1/3 Departmental and Administered (operating and/or capital); and Appropriation Act No.s 2/4 (payments to States, ACT, NT and local government, New Administered Outcomes, equity injections and/or administered assets and liabilities);
  • prior years' annual appropriations, including any withheld and/or quarantined amounts; and
  • special appropriations, including special accounts payments being met for the new functions by the relevant portfolio Department or another Commonwealth entity with appropriation authority that can assist the entity.

Assets and Liabilities

8. Agencies are required to record the transfer of the amount recognised in the books of the transferring agency as at the transfer date.

9. Assets and liabilities transfer between agencies when control passes from one agency to another, or when effective administrative responsibility transfers for administered items.

10. For further information see the Department of Finance website, RMP 118 Accounting for Machinery of Government Changes

Average Staffing Level (ASL) Cap

11. MoG changes may have impact on the ASL cap for individual portfolios, which would increase or decrease based on the agreed transfer of ASL between agencies. Such transfers would result in a net nil impact or a reduction in ASL at a whole-of-government level.

Audit Committees and Fraud Control Plans

12. The Accountable Authority of the agency with transferred functions will need to confirm the relevant audit committee (PGPA Act Section 45 and PGPA Rule 17) to comply with resources management framework obligations and provide a forum for communication between the Accountable Authority, senior managers of the transferred functions, internal auditors and the Auditor-General. This might initially involve appointing and using the committee of an existing agency.

13. Note that the audit committee of a gaining agency or an agency with functions transferring may need to ensure that their skills base relates to any new business or are no longer focussed on matters that have transferred to another agency.

14. Accountable Authorities are also responsible in ensuring their agencies have appropriate fraud control arrangements, and in setting the ethical tone within their agency. Section 15 of the PGPA Act provides that an entity Accountable Authority must manage the affairs of the agency in a way that promotes proper use of the Commonwealth resources, the achievement and purposes and the financial sustainability of the agency for which the Accountable Authority is responsible.

15. PGPA Rule 10 provides that an Accountable Authority must 'take all reasonable measures to prevent, detect and deal with fraud', including conducting a fraud risk assessment when there is a substantial change in the structure, functions or activities of the agency and developing and implementing a fraud control plan for the agency that deals with the identified risks as soon as practicable after conducting the assessment.

16. A copy of the 'Commonwealth Fraud Control Framework' can be obtained from the Attorney-General's Department website.

Bank Accounts

17. Non-corporate Commonwealth entities must operate bank accounts in accordance with the PGPA Act and policy guidance on managing cash. Additional advice on banking arrangements is provided to affected agencies following the announcement of each MoG.

18. Agencies must advise both the OPA Administration and Banking Policy Team (OPA Team) (within Finance) and the Reserve Bank of Australia whenever a new bank account is opened, or if an existing bank account is amended or closed.

19. Notification to both parties is required regardless of the transactional bank being used.

20. Agencies affected by a MoG, should consider the impacts to their banking arrangements. Some of those impacts may include:

  • a need to transfer bank accounts to the gaining agency;
  • establishing new Primary Accounts (i.e. a bank account that can receive drawdowns from the Official Public Account);
  • returning bank account balances to the Official Public Account; or
  • changes to the bank account 'type' (i.e. Departmental / Administered).

Central Budget Management System (CBMS) – Cash Management (CM) module

21. Agency Advice Units need to be notified of transferred functions to agencies as these will need to be created in CBMS (this is managed within Finance), to enable agencies to drawdown their appropriations via CM. This will enable agencies to submit drawdown requests  against the appropriations that they administer. Agencies should also ensure that any future dated drawdowns in CM for which they no longer retain authority to spend are removed. Contact the OPA Team (OPAAdmin [at] finance.gov.au) if you require assistance.

22. Agencies may also need to:

  • apply for the associated Outcome and program structures related to the transferred functions in CBMS (see the sections 'Outcome Statements and Program Structures' and 'CBMS'); and
  • apply for access to CBMS, including CM logons for staff as necessary through the CBMS Service Centre(CBMS [at] finance.gov.au) and organise appropriate training through the CBMS Training Team (CBMSServiceDesk [at] finance.gov.au).

CBMS – changes to estimates

23. Following the completion of any CBMS structural changes and agreement between CFOs on appropriation transfers and forward estimates amounts to be transferred, Finance will advise agencies when they will be able to process the necessary estimates adjustments in CBMS.

CBMS – changes to structures

24. Finance manages changes to agency, outcome, program and appropriation structures in CBMS. In order to ensure the relevant changes are made in CBMS, agencies must notify the relevant AAU of the following changes, which are required to be reflected in CBMS:

  • changes to existing portfolios;
  • changes to existing entities;
  • new agencies;
  • changes to existing outcomes and programs, noting there are separate approval processes associated with (a) new or amended outcome statements and (b) new programs; and
  • new outcomes and programs, again noting that there are separate approval processes associated with (a) new or amended outcome statements and (b) new programs.

Charging arrangements

25. For information regarding charging activities (including cost recovery activities) please refer to the Australian Goverment Charging Frameworks.

26. A gaining agency may need to implement new procedures if it gains an activity where the non-government sector is charged. There may be value in the gaining agency picking up relevant procedures from the transferring agency.

Competitive Neutrality

27. For information regarding the management of Competitive Neutrality arrangements please refer to the Australian Government Competitive Neutrality Guidelines for Managers.

Corporate Plan requirements

28. The accountable authority of an agency that is subject to variations in functions and responsibilities as a result of Machinery of Government changes will need to consider if a variation to the agencies corporate plan is required to take account of changes.

29. For further information see:

Delegations of Powers

30. The accountable authority of a non-corporate Commonwealth entity (NCE) with new functions will need to delegate his or her powers under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) to other appropriate officials (such as the Chief Financial Officers) so that they can undertake financial activities on behalf of the entity.

31. Further information on delegations of powers, including delegable and sub-delegable powers, promulgation and reviewing of delegations is located at the Finance website.

CASE STUDY: Travelling staff and credit cards

  • Where an agency has been affected by a MoG, some staff may be outside of the office, such as travelling interstate or overseas.
  • Some practical issues for the gaining agency to consider will be the application of any whole-of-Government delegations and the relevant internal sub-delegations for the new staff joining a new or a gaining agency.
  • Staff who are travelling will typically be using the Whole-of-Government travel card, and this will still continue to operate.
  • Agencies should seek to make contact with any staff that are travelling once there is potential of a MoG change, so that staff know that contact will be made as soon as possible if a MoG change occurs.

Employee Leave Entitlements

32. The government's policy requires a payment for the transfer of leave entitlements when an ongoing employee of a non-corporate Commonwealth entity (NCE) moves to another NCE, or to a corporate Commonwealth entity (CCE), or to the High Court of Australia.

33. The policy does not apply to CCEs or the High Court of Australia. However they are encouraged to apply the policy in the interests of promoting mobility across the Commonwealth.

34. The policy does not apply if the employee movement is a direct consequence of a transfer of a Government function, including AAO changes, as the funding arrangements in these situations would be considered as part of the annual appropriations transfer process.

35. For more information on the application of the policy, contact pmra [at] finance.gov.au.

Download of Financial Management Information Systems (FMIS)

36. The day after the MoG changes are announced or as soon as practical, losing entities will be required to provide a download of their FMIS to gaining entities for the specific function they are losing.

37. For those MoG changes that transfer functions that are not entire outcomes or programs it may be difficult for the losing entity to quickly identify transactions relating to the function. In such cases, Finance will consult with losing entities on the timeframe to provide a download of their FMIS.

Financial Reporting arrangements

38. Accountable Authorities of agencies are required under section 42 of the PGPA Act, to provide annual financial statements to the Auditor-General.

39. When a Commonwealth agency ceases to exist, Section 17A of the PGPA Rule provides for the accountable authority of an agency nominated by the Finance Minister, to prepare the annual financial statements.

40. Additional information on financial reporting in respect of restructures is available in the following documents:

41. Please email accountingpolicy [at] finance.gov.au for more information.


42. CFOs will need to determine whether the new agency is responsible for any grant programs or individual grants. If the gaining agency is responsible for grants the CFO should:

  • determine whether the agency has the necessary appropriations and delegations to support the administration of these grants; and
  • have regard to the Commonwealth's grants policy framework in the Commonwealth Grant Rules and Guidelines - 2017 in regard to the requirements that apply to Commonwealth grants.

Holding a function for less than a year

43. The finances follow function principle provides that annual appropriations devoted to a function at the point of the MoG change are to be transferred to the gaining agency

44. If an agency holds a function for less than a year and it is transferred to another agency before the end of the financial year, there should be a clear relationship between the funding that was received by the agency for the function and the funding that is transferred to the gaining agency.

45. Agencies, however, can structure themselves differently and it is possible that an entity may quickly integrate the function into the organisation.  This could impact the funding that would be transferred and this should be a consideration in negotiating funding.


46. Comcover should be contacted by both the gaining and the losing agencies in order to reassess the risk profiles of the affected entities and to arrange an adjustment of the insurance premiums and coverage as appropriate.

47. A particular issue to consider would be any live claim(s) or litigation(s) that the gaining agency would inherit.

Outcome Statements and Program Structures

48. Gaining agencies may need to create new or amend existing outcome statements when the transferring function does not fit within its current outcome statements. In a MoG context, entire outcome statements may be copied from the losing entity to the gaining entity through section 75 determinations.

49. Any new outcome statements for the gaining entity or amendments to the gaining entity's existing outcome statements are to be approved by the Finance Minister.

50. If you are considering a new outcome statement, please contact as soon as possible the Annual Appropriations Team (annual.appropriations [at] finance.gov.au).

51. When assessing the requirement for outcome statement changes, agencies need to also consider whether changes are necessary to the list of Government-endorsed programs in the Central Budget Management System (CBMS), either as a result of changes to program structures or as a result of movement of programs between outcomes and/or agencies.


52. There may be implications for an agency's procurement agreements, be they contracts, deeds, memoranda of understanding or some other form of agreement

53. In the first instance, contact your agency's central procurement unit for assistance regarding gaining or transferring procurement.

54. Information regarding procurement is available at the Department of Finance website.

55. Information regarding whole of Government arrangements, which in some cases must be used by an agency, is available at the Department of Finance website.

56. Any queries relating to AusTender transition for approaches to market and/or reporting standing offers and contracts should be directed to the AusTender Help Desk at tenders [at] finance.gov.au or 1300 651 698.

57. Any queries relating to ICT procurement contact the ICT Procurement Hotline on (02) 6120 8705 or email ictprocurement [at] dta.gov.au.

58. The Procurement Policy Team provides procurement-specific MoG advice to relevant agency procurement experts. Finance's Procurement Policy Team is available at procurementagencyadvice [at] finance.gov.au.

CASE STUDY: Procurement and MoG changes

  • Some practical issues for a new or a gaining agency to consider is the application of any Whole-of-Government delegations and the relevant internal sub-delegations for the new staff joining the gaining agency.
  • Contracts involving a Department of State or agency will typically continue without any immediate action where there is a change to a Department's or an agency's name, as that change to a contract can be recognised through the operation of Section 19C of the Acts Interpretation Act 1901.

Property Management/Leasing

59. Property and Construction Division in Finance provides assistance with coordinating and aligning property availabilities and needs across the Commonwealth. To assist agencies in managing the impact of MoG changes on property, Finance has developed a number of tools including:

  • the Commonwealth Property Management Framework;
  • the Commonwealth Accommodation Register on Govdex containing details of available or wanted Commonwealth agency accommodation throughout Australia;
  • financial cost modelling tool and templates to assess value for money using cost-benefit analysis; and
  • the Commonwealth National Lease, guidance and templates which can reduce the time and costs associated with lease negotiations. Memoranda of Understanding templates and guidance developed to support agencies when assigning and subleasing property.

60. Agencies must seek the endorsement of the Minister for Finance prior to entering into a property lease with a whole-of-life cost exceeding $30 million (or $100 million for the Department of Defence). Agencies are required to notify Finance of any leasing proposals for office accommodation (including shop fronts) that are expected to exceed $2 million (whole of life costs).

61. Property and Construction Division (PropertyFramework [at] finance.gov.au) can assist when agencies review their Property Management Plans to reflect implications of MoG changes on property.

Relocation costs

62. The general principle to be applied is that agencies should bear their own re-location costs.

63. It is reasonable to expect that a transferring agency would pay for:

  • physical movement of employees, furniture, equipment and files;
  • downloading information and other information technology activities relating to the move; including FOI and Information Publication Scheme obligations (including the proactive publication of public sector information); and
  • updating internal records

64. Gaining agencies would be expected to pay for the costs:

  • of establishing the transferred employees in their new premises, including re-loading information, setting up access to the network, security arrangements, and updating internal records.

Retained Entity Receipts

65. Section 74 of the PGPA Act and the accompanying PGPA Rule 27 apply to non-corporate Commonwealth entities.

66. In relation to functions gained as a result of MoG changes, the gaining non-corporate Commonwealth entity is entitled to retain receipts that accord with the provisions of section 74 of the PGPA Act. However, the following circumstance should be noted:

  1. If the transferring agency holds such receipts that were collected as pre-payments for departmental goods or services that are to be provided by the gaining agency, then the calculation of appropriation amounts to be transferred to the gaining agency, under section 75, must include such prepaid amounts.
  2. Cash that forms part of a bank account balance held by a losing agency's bank, and which was intended to be used to make payments, but at the time of a MoG change has not been paid, is to be transferred back to the Official Public Account (OPA). In CM this amount is to be added back to the available balance of the relevant appropriation. To add the amount back, the losing agency should contact the OPA Team (OPAAdmin [at] finance.gov.au) for assistance. This is to occur before the calculation for a related transfer of appropriations has been undertaken, so as to enable for:
  • annual appropriation – that cash to be included in the amount transferred through an estimates update or by a Section 75 instrument; and
  • special appropriation (including a special account) – the available balance in CM to be adjusted.

Special Accounts

67. Special accounts may be managed by a non-corporate or a corporate Commonwealth entity. In the event of MoG changes, entities should consider whether any special accounts are affected.

68. For further information on special accounts refer to the Department of Finance website or email special.appropriations [at] finance.gov.au.

Special Appropriations

69. A special appropriation is an authority provided in an Act (other than the annual appropriation Acts) to spend money from the Consolidated Revenue Fund. When a MoG change occurs, portfolio departments should review the relevant AAO instrument regarding the allocation of responsibilities for administering legislation that contains special appropriations. At the time when responsibility for administering a special appropriation is transferred, the gaining portfolio department should ensure the gaining agency is able to comply with its statutory responsibilities.

70. For further information on special appropriations refer to the Department of Finance website or email special.appropriations [at] finance.gov.au.


71. Where MoG changes occur, agencies will need to contact Finance by email, superbranch [at] finance.gov.au about the implications for membership of the civilian defined benefit schemes.

Third Party Drawdown Access

72. An agency may authorise another agency to submit cash requests on its behalf. Third party drawdown access is an arrangement where an appropriated agency provides another agency (the drawing agency) with approval for drawing down/receipting against their appropriation in the Commonwealth's Central Budget Management System (CBMS).

73. The agency that administers the relevant appropriation (i.e. the appropriated agency) remains responsible for entering estimates and actuals data in the Annual Estimates module of CBMS, and for reporting in Portfolio Budget Statements and Annual Reports (including the amounts of cash expended by the drawing agency). Additional guidance on third party arrangements can be obtained from the OPA Team (OPAAdmin [at] finance.gov.au).