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Overview

Objectives of the Attorney-General’s Department

The Attorney-General’s Department (AGD) supports the Attorney-General in achieving a just and secure society through the maintenance and improvement of Australia’s law, justice, security and integrity frameworks. It is a not-for-profit entity.

The department’s outcome statement has been amended to reflect changes under the Administrative Arrangements Order (AAO) of 29 May 2019 and consequential transfers of appropriation under section 75 of the Public Governance, Performance and Accountability Act 2013. Under the AAO, administered programs transferred to the department on 1 July 2019 and departmental programs and staff transferred on 25 July 2019.

The department provides expert advice and services on a range of law and justice issues and industrial relations issues to the Attorney-General and Minister for Industrial Relations, the Hon Christian Porter MP, and the Australian Government.

Outcome 1: A just and secure society through the maintenance and improvement of Australia’s law, justice, security and integrity frameworks.

There are seven programs within Outcome 1: Attorney-General's Department Operating Expenses - Civil Justice and Legal Services (1.1), Attorney-General's Department Operating Expenses - National Security and Criminal Justice (1.2), Australian Government Solicitor (1.3), Justice Services (1.4), Family Relationships (1.5), Indigenous Legal and Native Title Assistance (1.6) and Royal Commissions (1.7).

Outcome 2: Facilitate jobs growth through policies and programs that promote fair, productive and safe workplaces.

There are three programs within Outcome 2: Attorney-General’s Department Operating Expenses – Industrial Relations (2.1), Workplace Support (2.2) and Workers’ Compensation Payments (2.3).

The continued existence of the department in its present form and with its present programs is dependent on government policy and on continuing appropriations by Parliament for the department’s administration and programs.

The department's activities contributing toward these outcomes are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the department in its own right. Administered activities involve the management or oversight by the department, on behalf of the government, of items controlled or incurred by the government.

Basis of preparation of the financial statements

The financial statements are required by section 42 of the Public Governance, Performance and Accountability Act 2013 and are general purpose financial statements.

The financial statements and notes have been prepared in accordance with:

  • Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FFR); and
  • Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Impact of COVID-19

COVID-19 has not caused any significant impact to the amounts recorded for assets and liabilities in the financial statements nor any caused material uncertainty in the assumptions underpinning the balances recorded. Some of the department’s Administered Equity Investments are subject to prevailing economic conditions, amongst other factors, that may include impacts of the COVID-19 pandemic.

New Australian Accounting Standards

Adoption of New Australian Accounting Standard Requirements

No accounting standard has been adopted earlier than the application date as stated in the standard.

Standard/Interpretation

Nature of change in accounting policy, transitional provisions, and adjustment to financial statements

AASB 15 Revenue from Contracts with Customers / ASB 2016-18 Amendments to Australian Accounting Standards – Australian Implementation Guidance or Not‐for‐Profit Entities and AASB 1058 Income of Not‐For‐Profit Entities

AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019.

ASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

SB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

AASB 16 Leases

AASB 16 became effective on 1 July 2019.

This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not‐For‐Profit Entities

The department adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under the various applicable AASBs and related interpretations.

Under the new income recognition model the department shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), the department applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, the department shall consider whether AASB 1058 applies.

In relation to AASB 15, the department elected to apply the new standard to all new and uncompleted contracts from the date of initial application. The department is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.

In terms of AASB 1058, the department is required to recognise volunteer services at fair value if those services would have been purchased if not provided voluntarily, and the fair value of those services can be measured reliably.

Impact on transition

No amounts or balances were affected by the adoption of AASB 15 and AASB 1058. Amounts previously disclosed as revenue from sales of goods and services are now disclosed as revenue from contracts with customers and additional disclosures required under AASB 15 are made in Note 4.2A.

Application of AASB 16 Leases

The department adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations. The department elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The department applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

  • Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
  • Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
  • Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and
  • Apply the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.

As a lessee, the department previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, the department recognises right-of-use assets and lease liabilities for most leases. However, the department has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.

On adoption of AASB 16, the department recognised right-of-use assets and lease liabilities in relation to leases of office space and automobiles, which had previously been classified as operating leases.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the department’s incremental borrowing rate as at 1 July 2019. The department’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 0.14%.

The right-of-use assets were measured as follows:

  1. Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments; and
  2. All other leases: the carrying value that would have resulted from AASB 16 being applied from the commencement date of the leases, subject to the practical expedients noted above.

Impact on transition

On transition to AASB 16, the department recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below:

Departmental

1 July 2019

$‘000

Right-of-use assets – property, plant and equipment

338,002

Lease liabilities recognised at 1 July 2019

338,002

Lease incentives

14,323

Straight-line provision

10,587

Retained earnings

(24,910)

The following table reconciles the departmental minimum lease commitments disclosed in the department‘s 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

1 July 2019

$‘000

Minimum operating lease commitment at 30 June 2019

141,725

Less: short-term leases not recognised under AASB 16

(91)

Less: low value leases not recognised under AASB 16

-

Plus: effect of extension options reasonably certain to be exercised

237,535

Undiscounted lease payments

379,169

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

(41,167)

Lease liabilities recognised at 1 July 2019

338,002

Administered

1 July 2019

$‘000

Right-of-use assets – property, plant and equipment

1,127

Lease liabilities recognised at 1 July 2019

Straight-line provision

1,127

10

Retained earnings (Administered reconciliation schedule)

(10)

The following table reconciles the administered minimum lease commitments disclosed in the department‘s 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

1 July 2019

$‘000

Minimum operating lease commitment at 30 June 2019

1,137

Less: short-term leases not recognised under AASB 16

-

Less: low value leases not recognised under AASB 16

-

Plus: effect of extension options reasonably certain to be exercised

-

Undiscounted lease payments

1,137

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

(10)

Lease liabilities recognised at 1 July 2019

1,127

Taxation

The department is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST). The income tax expense recorded in these statements is a notional amount calculated as being payable to the Australian Government in the form of company income tax under the Income Tax Assessments Acts had they applied.

Reporting of administered activities

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes. Administered items are distinguished by shading in the financial statements.

Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Events after the reporting period

Departmental

There were no subsequent events that had the potential to significantly affect the ongoing structure and financial activities of the department.

Administered

There were no subsequent events that had the potential to significantly affect the ongoing structure and financial activities of the department.