~~Adz:Left~~BASSETERRE, ST. KITTS, JUNE 27TH 2007 (CUOPM) -

The St. Kitts and Nevis National Assembly is expected to approve on Thursday, "The Finance Administration Bill, 2007," which seeks to clarify and reform the system for the management and control of public money.

The Bill, which stands in the name of Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas, will also provide for the control of the Consolidated Fund, for the authorization of expenditures, for the establishment of Special Funds and Deposit Funds and for the raising of money by the Government.

The Finance Administration Bill, 2007," also provides for the management and control of the public debt and the giving of guarantees, for the investment of public money, for the preparation of the Public Accounts and for the governance of statutory bodies, thus clarifying the budgeting and reporting obligations of statutory bodies.

Part II, which deals with the Control and Management of Public Finance, lays out the responsibilities and powers of the Minister of Finance, the Financial Secretary, the Accountant General, accounting officers and delegates of accounting officers and public officers.

There are three funds in the Act, the Consolidated Fund (section 16), Special Funds (section 43) and Deposit Funds (section 46). The Act also recognises sinking funds as well.

Part III seeks to regulate the banking arrangements of the Government including the opening and closing of Government bank accounts. It also provides for the payment of public money and its deposit in banks.

The Payment of Money into Consolidated Fund is dealt with in Part IV and sets out one of the central principles of Government finance, namely, the obligation to pay all public money into the Consolidated Fund, subject to enumerated exceptions.

Those exceptions are articulated in section 18 (Fees and commissions deducted at source), section 19 (Write off of debts) and section 20 (Claims by the Government).

In order to ensure that there is transparency, section 21 requires that, when the powers set out in sections 18, 19 and 20 and similar powers under other Acts and regulations are exercised, a summary will have to be placed in a register available to the public and the exercise of the powers will be required to be reported in the Public Accounts. Section 22 deals with accounting issues raised by the recovery of money and Section 23 permits the Government to impose interest charges on overdue accounts.

Part V, which deals with the Payment of Money out of the Consolidated Fund, gives effect to the general principle underlying the operation of the Consolidated Fund, namely, that statutory authority is necessary to pay public money out of the Fund.Division 1 of Part V sets out the general principles. Section 24 enumerates the purposes for which money may be paid out of the Consolidated Fund.  ~~Adz:Right~~

Section 25 articulates the basic principle that no appropriation must be charged with any expenditure for a purpose other than an expenditure that is a lawful charge on it nor for an amount in excess of the amount available in the appropriation.

Section 26 provides that no expenditure charged on the Consolidated Fund by law shall be paid out for any purpose other than the purpose for which it was charged.

Division 2 of Part V sets out the provisions respecting the authorisation of expenditure.

Sections 27 and 29 provide for the authorisation of expenditure by means of annual and supplementary estimates and by the tabling of Appropriation and Supplementary appropriation Bills.

Section 28 provides for the preparation of a corporate plan for the Government in conjunction with the preparation of the annual estimates.

Section 30 requires that general warrants by the Minister of Finance be issued before the expenditure of appropriated money. It also provides for reserving expenditures.

Section 32 makes provision for the issue of provisional general warrants for making public expenditures when the appropriation Act for a year is passed after the beginning of the financial year. It also provides for reserving such expenditures.

Section 32 deals with special warrants (formerly called "appropriation

warrants"). Section 33 contains an important limitation on their use.

 ~~Adz:Left~~Sections 34 and 35 deal with reallocation warrants and warrants for transfer between expenditure votes. These introduce an important element of flexibility into government spending. Warrants for transfer between expenditure votes are new. Section 36 provides for the issue of advance warrants.

Section 37 provides for imprest warrants to control cash in the hands of public officers. The Minister may make regulations respecting these warrants under section 56(2)(j).

>Section 38 permits the accounting officer of one ministry or department

>by departmental warrant to allow an accounting officer in another

>ministry or department to charge the accounts of the first-mentioned

>ministry or department.

Division 3 of Part V deals with three specific cases of payment, namely, the refunds of money (section 39), the settlement of claims against the Government (section 40) and the right of set off (section 41). The right of set off works as follows. If X owes $100 to the Government and the Government owes $300 to X, the Government will have the right to deduct the $100 from the $300 and pay X the balance, namely, $200. This provision puts on a statutory basis a power that has been exercised by the Government for some time.

Section 42 provides for the lapse of appropriations and warrants at the end of the financial year, subject to recording and payment of debts from the financial year owed by Government. The effect of this provision is to permit a modification of the present cash accounting system so as to permit a limited use of accruals. Accrual accounting gives a better match of revenue and expenditure in a financial year than the present cash accounting system.

Part VI provides for Special Funds and Deposit Funds. Part VII deals with Investments and updates the law respecting the investment of public money and deals with the crediting of interest and dividends to the various funds.

Public Debt and Guarantees is dealt with in Part VIII. Section 48 states the general rule that money may be raised only under the authority of an Act of Parliament or resolution of the National Assembly. Section 49 deals with short-term borrowing. Sections 50 to 52 are new and provide for certain general powers to supplement loan Acts and resolutions. Section 53 allows the Minister to change the form of the public debt so long as it is not increased. Section 54 deals with guarantees.

Part IX provides for the preparation of the Public Accounts and their submission to the Director of Audit and ultimately to the National Assembly.

Part X provides for greater accountability of statutory bodies to the Government. This Part applies to all statutory bodies notwithstanding the provisions of any other law.

Section 59 requires statutory bodies to prepare a business plan that includes its annual estimates for the approval of the Minister of Finance and the Minister responsible for the statutory body (called the appropriate Minister in this Part). It also requires the plan to be implemented and forbids changes without the approval of the Minister of Finance and the appropriate Minister.

Section 60 forbids statutory bodies to raise money by loan, make loans or guarantee repayment of loans or the performance of obligations without the prior approval of the Minister of Finance.

Section 61 sets a standard for keeping the accounts of a statutory body.

Section 62 requires a statutory body to prepare annual financial statements and have them audited within 6 months of the end of each financial year.

Section 63(1) requires the statutory body to furnish its financial statements, the report of the auditor and the annual report of the statutory body to the appropriate Minister in a sufficient number of copies for the members and officials of the House. Section 63(2) requires the appropriate Minister to table them in the House.