Memorandum No. 1990-15 'Out-of-Pocket Expenses' issued on 28 March 1990, contains instructions on how certain out-of-pocket and entertaining expenses are to be managed. Since that Memorandum was issued, consideration has been given to providing further detailed instructions in the light of the comments made by the Auditor-General in his report to Parliament on 26 March 1990.

However, after further consulting the Auditor-General, I have decided not to issue any more detailed and prescriptive instructions relating to out-of-pocket and hospitality-entertainment expenses. It is the philosophy of this Government to have "managers manage". This philosophy includes the concept of broad guidelines within which to practice such management, and confers greater management controls and delegations which permits the appropriate degree of flexibility but is accompanied by increased accountability, with associated penalties if such is warranted.

Expenses relating to Ministers

It is expected that the allowance paid to Ministers would cover most of the normal representation responsibilities associated with the portfolio. However, there may be occasions where it is appropriate for expenses incurred to form a valid charge against the hospitality funds of a Department or Authority for which the Minister is responsible.

For such a charge to be acceptable for Ministers, the following will apply:

• The event to which the charge is related must have a direct business relationship with the Minister's portfolio.
• Working meals are not to be regular occurrences and would normally have relatively low charges per head and involve participation of persons from outside the portfolio or with senior officers from across the portfolio.
• The expenditureincurred should not provide a predominantly personal benefit to the Minister, members of their family or friends or officers of organisations coming under their responsibility, e.g. Christmas and Easter functions or social functions for staff. However, wreaths or flowers may be purchased for the purpose of a floral tribute to families or as an appreciation for long service to the Department or Authority.
• Tips would generally not be permissible, except where it may be a normally expected payment.
• Expenditure on minor gifts of protocol or public relations are not acceptable unless such gifts are in conformity with a particular Department's functions and would be considered acceptable in accordance with community expectations.
• The accounting arrangements as outlined for the handling of out-of-pocket expenses for Departmental staff will apply, and the charges incurred should fit within the allocation of the particular Department or Authority to whose activities the charges related.

Expenses relating to Chief Executive and Senior Executive Officers

The question of out-of-pocket expenses incurred by officers are often related to entertainment and other forms of hospitality associated with performing official duties. Department and Authority Heads are responsible (and therefore accountable) to ensure that appropriate controls are exercised in this area of expenditure.

Where an officer is paid a salary and an identified expense allowance or is paid a remuneration package based on a "Total Cost to Employer" (as is the case for the Chief Executive and Senior Executive Services) he or she is expected to cover expenditure of a minor nature associated with work and normal representational responsibilities, such as an occasional round of drinks, confectionery, etc. The Department Head or authorised senior officer may, in the light of particular circumstances, approve of certain out-of-pocket expenses by such officers forming a charge against the funds of the organisation. Such expenses must be directly related to the performance of an officer's official duties and the costs must be reasonable.

Examples include costs incurred on senior representational duties (such as representing a very senior officer, the head of the organisation or the Minister) and major hospitality duties (such as entertaining a group of interstate/overseas visitors or representatives of private organisations) where there is a definite business relationship with the Department.

Where an officer is in receipt of only a cash salary, expenses of an irregular and/or minor nature associated with work and normal representational duties may be charged against the organisation. Other than in exceptional cases, such officers are required to obtain prior approval of an authorised senior officer for any out-of-pocket expenditure of this nature.

For out-of-pocket expenses incurred by officers to be acceptable as a charge against official funds, the following apply:

• The event to which the charge is related must have a direct business relationship with the officer's duties.
• Working meals are not to be regular occurrences and would normally have relatively low charges per head and involve participation of persons from outside the organisation or very rarely with senior officers from across the organisation.
• The expenditure incurred should not provide a predominantly personal benefit to the officers, members of their family or friends e.g. staff Christmas and Easter functions or other social functions for staff. Wreaths or flowers may be purchased for the purpose of a floral tribute to families or as an appreciation for long service to the Department or Authority.
• Tips would generally not be permissible, except where it may be a normally expected payment.
• Expenditure on minor gifts of protocol or public relations are not acceptable unless such gifts are in conformity with a particular Department's functions and would be considered acceptable in accordance with community expectations.
• Provision of certain facilities for work purposes at home which would, under normal circumstances, be provided by the officer for personal use, may not be claimed as a legitimate expense e.g. payment for a TV antenna which may be installed to enable officers to receive transmissions to be aware of matters raised by the media, as part of their normal duties.

The above requirements do not, of course, apply to expenditures to which legislative, industrial or Treasury directions provide for reimbursement of expenses.

Accounting arrangements

• an allocation for out-of-pocket expenses should be identified within the organisation's budget and accounting system;
• all out-of-pocket expenditure approved as an official charge against the organisation would be charged and reported against this allocation.
• full documentation will be required to support any claim against this allocation including details of the persons present and the nature of and purpose of the event.
• where it is not possible for the expenditure to be billed direct to the relevant Department or Authority, the officer may,
• • elect to have the funds advanced, subject to producing receipts later as to actual expenditure, or
  • seek reimbursement up to the approved amount on production of receipts.
• officers may choose to use their own credit/charge card(s) and claim reimbursement on the bill. However, any interest, or other financial charge incurred in using sucha card will not be reimbursed.

I would be pleased if you would ensure the observance of the above requirements by Departments and Authorities falling within your area of administration.

Nick Greiner, M.P.