2. Financial Position
This section analyses the Australian Bureau of Statistics’ assets used to generate its financial performance and operating liabilities incurred as a result.
Leasehold improvements and plant and equipment are carried at fair value in accordance with AASB 13 Fair Value Measurement. The remaining assets and liabilities disclosed in the statement of financial position do not apply the fair value hierarchy.
Employee related information is disclosed in the People and Relationships section.
2.1 Financial Assets
2019 |
2018 |
|
---|---|---|
$'000 |
$'000 |
|
Appropriations receivable |
65,904 |
93,594 |
Goods and services |
2,556 |
3,074 |
GST receivable from the Australian Taxation Office |
2,080 |
3,350 |
Other receivables |
634 |
325 |
Total trade and other receivables (gross) |
71,174 |
100,343 |
Less impairment loss allowance |
(6) |
(4) |
Total trade and other receivables (net) |
71,168 |
100,339 |
Credit terms for goods and services were within 30 days (2018: 30 days).
All trade and other receivables are expected to be recovered in no more than 12 months.
Reconciliation of the Impairment Allowance Account: |
||
Movements in relation to 2019 |
||
Goods and services |
Total |
|
$'000 |
$'000 |
|
Opening balance |
(4) |
(4) |
Amounts written off |
6 |
6 |
Amounts recovered and reversed |
- |
- |
Increase/decrease recognised in net surplus |
(8) |
(8) |
Closing balance |
(6) |
(6) |
Accounting Policy
Trade receivable
Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.
Appropriations receivable
Refer to Revenue from Government for accounting policy.
Impairment of financial assets
AASB 9 Financial Instruments replaces the ‘incurred loss’ model previously used under AASB 139 Financial Instruments: Recognition and Measurement with an Expected Credit Losses (ECL) model. Trade and other receivables assets at amortised cost are assessed for impairment at the end of each reporting period. The simplified approach has been adopted in measuring the impairment loss allowance at an amount equal to lifetime ECL.
2.2 Non-Financial Assets
Note 2.2A: Reconciliation of the Opening and Closing Balances of Plant & Equipment and Intangibles |
||||
Leasehold improvements |
Plant and equipment |
Computer software1 |
Total |
|
$’000 |
$’000 |
$’000 |
$’000 |
|
As at 1 July 2018 |
||||
Gross book value |
33,544 |
29,859 |
249,627 |
313,030 |
Accumulated depreciation, amortisation and impairment |
- |
(1,310) |
(148,120) |
(149,430) |
Total as at 1 July 2018 |
33,544 |
28,549 |
101,507 |
163,600 |
Additions |
||||
Purchased |
1,519 |
3,335 |
2,133 |
6,987 |
Internally developed |
- |
- |
27,359 |
27,359 |
Revaluations and impairments recognised in other comprehensive income2 |
(1,020) |
- |
- |
(1,020) |
Impairments recognised in net cost of services |
- |
- |
(1,984) |
(1,984) |
Depreciation and amortisation |
(4,164) |
(9,082) |
(20,512) |
(33,758) |
Reclassification |
4,253 |
(4,226) |
(28) |
(1) |
Disposals |
||||
Write-down of assets |
- |
(344) |
(1,736) |
(2,080) |
Total as at 30 June 2019 |
34,132 |
18,232 |
106,739 |
159,103 |
Total as at 30 June 2019 represented by |
||||
Gross book value |
33,850 |
27,821 |
243,574 |
305,245 |
Work in progress |
282 |
61 |
26,971 |
27,314 |
Accumulated depreciation, amortisation and impairment |
- |
(9,650) |
(163,806) |
(173,456) |
Total as at 30 June 2019 represented by |
34,132 |
18,232 |
106,739 |
159,103 |
1. The carrying amount of computer software include $96.272 million internally generated software and $10.467 million purchased software. The ABS engaged an independent assessor to assess impairment of internally generated software. The impairment result was reflected in the Statement of Comprehensive Income in accordance with AASB 136 Impairment of Assets.
2. The ABS engaged an independent valuer to revalue Leasehold improvements. The decrease in the revaluation was $1.020 million which was recognised in the asset revaluation reserves in accordance with AASB 116 Properties, Plant and Equipment. The make good provision was revalued and increased by $0.014 million, and disclosed in Note 2.4A Other Provisions.
Contractual commitments for the acquisition of property, plant, equipment and intangible assets
Capital commitments relate to contracts for the acquisition of property, plant, equipment and intangible assets.
Commitments are GST inclusive where relevant.
< 1 year |
1 to 5 years |
Total |
|
---|---|---|---|
2018-19 Capital Commitments |
$'000 |
$'000 |
$'000 |
Plant and equipment |
925 |
- |
925 |
Intangibles |
4,568 |
3,983 |
8,551 |
Total commitments |
5,493 |
3,983 |
9,476 |
Accounting Policy
Acquisition of Assets
Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.
Asset Recognition Threshold
Purchases of plant and equipment are recognised initially at cost in the statement of financial position. In 2018-19, the ABS implemented new asset recognition thresholds, where asset purchases would have to satisfy thresholds at a unit level as well as on a class level, otherwise they are expensed in the year of acquisition. The ABS increased the class thresholds to $7,000 for IT Hardware (2017-18: $1,000), $7,000 for Plant and equipment (2017-18: $2,000) and $30,000 for Leasehold Improvement (2017-18: $2,000). The table below summarises the asset recognition thresholds for 2018-19:
Asset Class |
Unit Threshold1 |
Class Threshold |
---|---|---|
IT Hardware1 |
$1,000 |
$7,000 |
Plant and equipment |
$1,000 |
$7,000 |
Leasehold Improvement |
$1,000 |
$30,000 |
1. Laptops are excluded from the Unit Threshold.
The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by the ABS where there exists an obligation to restore the property to its original condition. These costs are included in the value of the ABS’s leasehold improvements with a corresponding provision for the ‘make good’ recognised.
Revaluations
Following initial recognition at cost, property, plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depend upon the volatility of movements in market values for the relevant assets.
Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reversed a previous revaluation increment for that class.
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.
Depreciation
Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the ABS using, in all cases, the straight-line method of depreciation.
Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.
Depreciation rates applying to each class of depreciable asset are based on the following useful lives:
2019 |
2018 |
|
---|---|---|
Leasehold improvements |
Lease term |
Lease term |
Property, plant and equipment |
4-10 years* |
4-10 years* |
* Within this class, Artwork and Curios have a useful life between 10-100 years.
Impairment
All assets were assessed for indications of impairment at 30 June 2019. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment loss recognised if the asset’s recoverable amount is less than its carrying amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the ABS were deprived of the asset, its value in use is taken to be its depreciated replacement cost.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.
Intangibles
The ABS’s intangibles comprise purchased and internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Software assets were assessed for indications of impairment as at 30 June 2019. Refer to Note 1.1C for further detail.
Internally Generated Software
In its role as Australia's national statistical entity, the ABS builds and maintains a significant set of internally generated software assets (IGSW) assets. These assets are added to over time, in line with the increasing range of statistical information sought by Government, business and the general community, and the increasing use of technology, particularly in relation to collection, analysis and dissemination activities.
All software developed in-house are capitalised. The costing methodology capitalises direct salary and on costs for programmers. General administration and overhead costs relating to software development are not capitalised. The data capture systems in place to collect effort recording data for programmers are in line with the requirements of the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015.
Asset Recognition Threshold
In 2018-19, the ABS increased the class thresholds to $50,000 for Purchased Software (2017-18: $1,000) and $300,000 for internally generated software (2017-18: $100,000). The ABS also implemented a unit threshold of $1,000 for Purchased Software (2017-18: Nil). Purchases of intangible assets are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than the following thresholds, which are expensed in the year of acquisition.
Asset Class |
Unit Threshold |
Class Threshold |
||
---|---|---|---|---|
Purchased Software |
$1,000 |
$50,000 |
||
Internally Generated Software |
NA |
$300,000 |
Amortisation
Software is amortised on a straight-line basis over its anticipated useful life.
The ABS has long term commitments to survey and data collection programs. These are supported by software packages that are required to be maintained for the same time period as the data collection and analysis programs, to ensure consistency in approach and of data treatment.
The useful lives of the ABS’s software are:
2019 |
2018 |
|
---|---|---|
Computer software (purchased) |
5 years* |
5 years* |
Computer software (internally generated) |
5-15 years* |
5-15 years* |
* The above table outlines the range of life in years for computer software, however, the average life is currently 10 years (2018: 10 years).
Capital Work in Progress
Capital work in progress represents two main asset types: software assets under development, and office refurbishments. Work in progress is disclosed in the intangibles, and property, plant and equipment balances respectively.
Software assets are not amortised until the year in which the development phase is completed and the asset is operational. Where use of the asset commences after substantial completion of the development phase, but some improvements or enhancements to the system continue to be made, the date of substantial completion is treated as the date of completion and amortisation commences from that date
2.3 Payables
2019 |
2018 |
|
---|---|---|
$'000 |
$'000 |
|
Trade creditors and accruals |
15,013 |
23,415 |
Operating lease rentals |
7,670 |
6,454 |
Total suppliers payables |
22,683 |
29,869 |
Settlement is usually made within 30 days.
Accounting Policy
Suppliers and Other Payables
Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced). Supplier and payables are derecognised upon payment.
Salaries and wages |
1,952 |
2,379 |
Superannuation |
335 |
408 |
Separations and redundancies |
144 |
2,009 |
Lease incentives |
6,120 |
7,017 |
Unearned revenue |
34,791 |
38,576 |
Other |
802 |
707 |
Total other payables |
44,144 |
51,096 |
Accounting Policy
Salaries and wages, Superannuation, Separations and redundancies
Refer to Note 1.1A: Employee Benefits for detail.
Lease incentives
The ABS has entered into a number of accommodation leases, which include lease incentives taking the form of ‘free’ leasehold improvements. Under interpretation 115 Operating Lease - Incentives, all incentives in relation to operating leases are required to be classified as an integral part of the net consideration of the lease for the leased asset, irrespective of the incentives nature, form, or timing of payments.
Where an asset is acquired by means of an incentive under an operating lease, the asset is capitalised at the fair value of the lease incentive at the inception of the contract, and a liability is recognised at the same time, for the same amount.
Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.
Unearned revenue
Unearned revenue includes revenue from provision of statistical consultancies and revenue from other entities for statistical surveys. The unearned revenue is recognised on a stage of completion basis over the period of the provision of services as provided.
2.4 Provisions
Make good provision |
|
$’000 |
|
As at 1 July 2018 |
509 |
Unwinding of discount or change in discount rate |
11 |
Revaluation |
14 |
Total as at 30 June 2019 |
534 |
The ABS currently has two agreements (2018: two) for the leasing of premises which have provisions requiring the ABS to restore the premises to their original condition at the conclusion of the lease. The ABS has made a provision to reflect the present value of these obligations.
Significant Accounting Judgements and Estimates
Make good
The ABS currently holds ten leases for office space around Australia. All the lease agreements include a make good clause.
It is considered that two make good arrangements are likely to be exercised as it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably determined. The provision represents the estimated costs of making good leasehold premises in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets.
For the remaining eight leases, it is considered probable that the make good requirement will not be exercised.
Visit
https://www.transparency.gov.au/annual-reports/australian-bureau-statistics/reporting-year/2018-2019-43