Financial Management Regulations 2024

The central concept is the incident, defined in regulation 5 as either a loss of or deficiency in public money, or loss, destruction, or damage to other property of the State. This captures both theft and negligent damage, but also accidental loss and accounting discrepancies. The investigation refers only to an investigation under section 57 of the Act, not any broader internal probe. The regulations do not define when an investigation must be held - that is triggered by the empowered officer under subsection 57(3) of the Act. The regulations merely supply the procedural skeleton once that trigger is pulled.

The empowered officer is an accountable officer or a chief finance and accounting officer (defined in the Act). This person is responsible for issuing the preliminary notice, appointing the investigator, making officers available, and receiving the report. Importantly, the empowered officer cannot nominate themselves as the investigator if they held that role in the employing department at the time of the incident (regulation 10(2)). This is a partial independence safeguard, but it does not forbid the investigator being a different employee of the same department, or a person with close working relationships.

The relevant employee is the employee under investigation (regulation 5). The regulations provide that employee with rights: to nominate a person to assist them (regulation 11), to make written and oral submissions (regulations 13, 14), to request witnesses (regulation 13(1)(c)(ii)), and to receive a copy of the investigation report within seven days of the empowered officer receiving it (regulation 17). However, the 7 day window for the employee to nominate an assistant is tight; if no nomination is made, the empowered officer may appoint a assistant (regulation 11(3)). This could lead to an unsuitable or conflicted appointee, undermining the fairness the regulations purport to guarantee.

The prescribed authorities in Schedule 1 are defined for the purpose of bringing certain statutory bodies within the definition of authority in the Act. However, Part 3 (the investigation procedure) applies only to departments (regulation 7(2)), not to these authorities. This means that if an incident occurs at the Environmental Protection Authority, the procedural requirements of regulations 9 through 17 do not apply. The Act’s section 57 may still apply, but the detailed steps are absent. This differential treatment reduces compliance costs for those bodies but also means less procedural protection for their employees.

The regulations directly affect employees of Victorian government departments. Any department employee who handles public money or State property and who is suspected of causing or contributing to a loss, deficiency, or damage may become a relevant employee and be subject to the Part 3 investigation process. That includes clerical officers, financial officers, cashiers, property managers, and any other employee whose duties involve custody or handling of State assets. The regulations create a specific procedural framework for these employees, giving them certain rights but also locking them into a process with no binding rules of evidence and limited formality.

The empowered officer (the accountable officer or chief finance and accounting officer of each department) must take on administrative responsibilities: serving notices, appointing investigators, making officers available, and ensuring reports are distributed. This creates a compliance burden on senior departmental management. They must ensure they have suitable persons available to be appointed as investigators who were not empowered officers at the time of the incident. In a small department, this could be difficult, potentially requiring appointment of an investigator from another department or from outside the public service entirely.

The prescribed authorities in Schedule 1 - the Environment Protection Authority, the Victorian Gambling and Casino Control Commission, and the Victorian Health Promotion Foundation - are affected only by Parts 2 and 4. They must comply with the money handling rules (regulation 8) and must permit inspection of their records by Department of Treasury and Finance staff (regulation 18). They are exempt from the investigation procedure. This reduces their compliance burden but also means that if an incident occurs within these bodies, the procedural protections for employees are absent. Any employee at those bodies faced with a section 57 investigation will not receive the preliminary notice, the right to nominate an assistant, or the report within 7 days that the regulations mandate for department employees.

The Department of Treasury and Finance gains a free-standing inspection power. Any person employed in that department may inspect the accounting and financial records of any authority (including the prescribed authorities) and report deficiencies to the Minister. This is a broad power with no stated notice requirement, no limitation to specific incidents, and no threshold. It creates an ongoing monitoring capability that could be used to detect problems before they escalate, or as a tool to pressure authorities on financial management.

The regulations impose duties primarily on the empowered officer. Under regulation 9, once the empowered officer directs an investigation under section 57(3), they must serve a preliminary notice on the relevant employee specifying in detail the date, time, persons involved, description of circumstances, and nature of any breach. This is a mandatory duty: “must cause to be served”. Failure to serve the notice could invalidate the investigation. The same duty applies to the notice of appointment of the investigator under regulation 13, which must be served within 7 days of appointment. The empowered officer must also send the investigation report to the relevant employee within 7 days of receiving it (regulation 17).

The investigator has duties: to conduct the investigation in private with as little formality and expedition as possible, to allow the employee reasonable opportunity to make oral submissions and further written submissions, and to include certain content in the report (regulation 14, 16). If a witness appears to have caused or contributed to the incident, the investigator must notify that witness in writing of section 57 and the regulations (regulation 15). The investigator must also agree to any reasonable written request by the relevant employee for inclusion of a witness (regulation 14(1)(d)). “Reasonable” is not defined, leaving significant discretion.

The relevant employee has rights: to nominate a person to assist them (regulation 11), to make written and oral submissions, to request witnesses, and to receive the report within 7 days. However, the right to nominate is limited: if the employee does not nominate within 7 days of the preliminary notice, the empowered officer may nominate someone (regulation 11(3)). This is a practical limit on employee choice. The employee also has the right to object during the investigation (which must be recorded in the report under regulation 16(3)(e)) but the regulations provide no mechanism for the investigator or empowered officer to respond substantively to that objection.

For authorities and departments generally, regulation 8 creates a duty to pay unidentified or surplus money to the Treasury Trust Fund and to cancel unpresented cheques after 15 months. This is a clear, mechanical duty with no discretion. The 15 month period is relatively generous compared to some commercial law timeframes for stale cheques. The duty is triggered automatically, not upon suspicion or direction.

The regulations themselves do not create or specify any penalties. They are made under section 59 of the Financial Management Act 1994, and any enforcement action for non compliance would presumably rely on provisions of that Act or other applicable laws (such as criminal law for theft, or disciplinary codes for public service misconduct). The regulations are procedural; failure to follow them does not constitute an offence under the regulations. However, non compliance could have significant practical consequences.

If an empowered officer fails to serve the preliminary notice or the notice of appointment, the investigation may be procedurally flawed. Any report produced might not be admissible in subsequent disciplinary proceedings or recovery actions under the Act. A relevant employee who is not given proper notice could challenge the validity of any adverse findings on natural justice grounds. Similarly, if the investigation is conducted with excessive formality or without the required opportunities for the employee to make submissions, a court or tribunal might set aside any resulting determination.

The inspection power under regulation 18 carries no penalty for non cooperation, but an authority that refuses inspection may face political or ministerial pressure, or may be subject to directions from the Minister under the Act. The regulations do not give the inspector any coercive powers such as entry without consent or search warrants.

For the prescribed authorities, the lack of Part 3 application means they are not bound by the procedural safeguards. This could be seen as a gap: if the Act itself imposes liability on employees of those authorities for losses, the absence of the regulation procedures could lead to less fair process. From an efficiency perspective, it reduces compliance costs for those bodies, but it also creates an uneven playing field for employees across the public sector.

The regulations are delegated legislation under section 59 of the Financial Management Act 1994. That Act is the primary source of law for financial management in Victoria. The regulations fill in procedural detail that the Act leaves open, particularly for investigations under section 57. The Act itself may contain provisions about recovery of losses, suspension or dismissal of employees, and accounting obligations. The regulations do not amend or override the Act.

The definition of employee in regulation 5 cross references to the Public Administration Act 2004, which defines who is an employee of the public service. This means the regulations apply only to employees falling within that definition. Contractors, consultants, and volunteers are not relevant employees for the purposes of Part 3, even if they handle public money or property. This is a significant scope limitation. If a contractor causes a loss, the investigation procedure does not apply; the department would need to rely on contractual remedies or other legal processes.

The investigation process explicitly provides that the investigator is not bound by the rules of evidence (regulation 14(1)(c)). This interacts with evidentiary rules in other contexts: findings made in the investigation may not be admissible in court proceedings without further proof. The report’s statements of loss, defects, or employee culpability are not judicial findings. They may inform decisions by the accountable officer, but they do not settle legal liability.

The prescribed authorities listed in Schedule 1 are bodies created under their own legislation: the Environment Protection Act 2017, the Victorian Gambling and Casino Control Commission Act 2011, and the Tobacco Act 1987. These Acts may impose their own financial management and reporting obligations. The regulation 18 inspection power interacts with those Acts by giving DTF employees a right to inspect records beyond any oversight powers those Acts provide. There is potential for conflict if those Acts limit access to certain information (e.g. commercially sensitive gambling data), but the regulations do not address that.

The revocation of the 2014 regulations (regulation 4) means any investigation commenced before 12 May 2024 under the old regulations may need to consider transitional issues. The new regulations do not contain a savings provision for investigations in progress. This could create uncertainty about which procedure applies to a partially completed investigation.

These are the first version (Version No. 001) of the Financial Management Regulations 2024. They were made on 30 April 2024 by the Governor in Council and came into operation on 12 May 2024. The Endnotes state that there are no amendments made to these regulations by any statutory rules, subordinate instruments, or Acts. The previous regulations, the Financial Management Regulations 2014 (S.R. No. 29/2014) and the Financial Management Amendment Regulations 2014 (S.R. No. 161/2014), are revoked. The sunset provision under the Subordinate Legislation Act 1994 means these regulations will automatically repeal on 30 April 2034, unless earlier revoked or remade.

The source does not reference any litigation concerning these regulations, nor any reported cases interpreting their provisions. Because the regulations are new (effective May 2024), there is no litigation history yet. The predecessor 2014 regulations may have been the subject of challenges in the Victorian Civil and Administrative Tribunal or the Supreme Court, but the source does not mention them. A practitioner would need to search case law databases separately. Given that the regulations are procedural and apply internally within departments, litigation may be rare. However, if a department seeks to recover losses from an employee based on an investigation report that failed to follow the mandatory procedural steps, the employee could challenge the recovery action on natural justice grounds. The Victorian Supreme Court has jurisdiction for judicial review of administrative decisions; a decision based on a procedurally flawed investigation could be set aside. The absence of any reference to litigation in the source suggests no binding authority directly on these regulations exists, but that is a cautious observation.

Several features of the regulations could trip up a department, an empowered officer, or an employee. First, the investigator independence requirement in regulation 10(2) is limited: it only bars a person who was an empowered officer of the department employing the relevant employee at the time of the incident. It does not bar a person who is currently an empowered officer of a different department, nor a person who was an employee of the same department in a different role. An investigator could be a close colleague of the employee, or could have line management authority over the employee, so long as they were not specifically an empowered officer. This weakens the appearance of independence.

Second, the default nomination of an assistant under regulation 11(3) is triggered if the employee does not nominate within 7 days. The empowered officer may then nominate “a suitable person”. The regulations do not require that person to be independent from the empowered officer or the department. An employee who is unwell, on leave, or unaware of the 7 day window could end up with a departmental nominee who may have conflicts of interest. The department has a strong incentive to use this default to appoint a person who will not be adversarial to the investigation.

Third, the investigation report must include mitigating circumstances under regulation 16(3)(d) only if the report finds that the employee caused or contributed to the incident. This means if the investigator finds the employee blameless, the report need not include mitigating factors. That may seem logical, but it means the report might not mention evidence that could later be relevant if the employee is subsequently found liable in another forum.

Fourth, the report is due within 3 months after completing the investigation, not after the investigation begins. The investigator controls when the investigation is “completed”. This creates a risk of indefinite extension: the investigator could delay completion and then have 3 months to write the report, stretching the overall process. The empowered officer can grant a further period (regulation 16(1)(b)), but there is no cap.

Fifth, the regulations do not require the empowered officer to take any action on the report. The report is sent to the employee, but the empowered officer is not obliged to accept the findings, recover losses, or discipline the employee. This means an investigation could result in a report that is simply filed, creating potential for selective enforcement.

Sixth, for prescribed authorities, Part 3 does not apply. An employee of the Environment Protection Authority suspected of causing a deficiency has no right to the preliminary notice, the 7 day nomination, or the report. The Act’s section 57 may still be invoked, but the procedural protections are absent. This differential treatment could be challenged under public sector employment principles, but the regulations are clear.

For departments, compliance requires establishing internal procedures to implement the regulations. The most critical area is the investigation process under Part 3. Empowered officers should maintain a register of potential investigators who are not, and have never been, empowered officers of the department. Ideally, they should have a list of pre approved investigators from other departments or from external panels to avoid conflicts of interest. When an incident occurs, the empowered officer must immediately prepare a preliminary notice under regulation 9. That notice must be detailed - specifying the date, time, persons involved, a detailed description of circumstances, and the nature of the alleged breach. Vague notices risk procedural challenge.

The 7 day clock for the employee to nominate an assistant starts from service of the preliminary notice. The department should document the date and method of service. If the employee does not nominate within 7 days, the empowered officer may appoint a suitable person. To avoid allegations of bias, the department should develop a policy for selecting that person independently (e.g., from a central pool).

The investigator must be given full and free access to accounts and records (regulation 12(2)). The department should ensure that no records are withheld or delayed. The investigator must also conduct interviews in private, with minimal formality. The department should provide a neutral room and ensure no parties from the department are present unless requested by the investigator.

The report must include all mandatory content: reasons, administrative defects, an estimate of loss or damage, and if the employee is found to have contributed, the specific mitigating circumstances listed in regulation 16(3)(d). Complying with those subparagraphs requires the investigator to gather evidence on the employee’s work experience, supervision, instructions, working conditions, reliability, and any allowances for assumption of responsibility. This is a fact intensive exercise. Departments should prepare standardised interview questions and document templates to capture this information.

The report must be sent to the employee within 7 days of the empowered officer receiving it. This requires a prompt internal review. The empowered officer should not delay reviewing the report.

For the prescribed authorities (EPA, VGCCC, VicHealth), compliance is lighter but still required. They must ensure unidentified or surplus money is paid to the Treasury Trust Fund, and that cheques are cancelled after 15 months with equivalent payment to the Fund. They should maintain systems to track cheque age and to categorise unidentified receipts. They must also allow any DTF employee to inspect their accounting records. Rather than waiting for a request, they should ensure records are well organised and that internal controls are documented, because a DTF inspector who finds deficiencies will report them to the Minister.

All departments and authorities should document their compliance steps in writing. The regulations provide no grace period for transitional investigations; any investigation commenced after 12 May 2024 must follow the new regulations. Legal advice should be sought for investigations that straddle the commencement date.