1. Departmental financial performance

• Note 1.1: Expenses
• Note 1.2: Own-source revenue

2. Departmental financial position

• Note 2.1: Financial assets
• Note 2.2: Non-financial assets
• Note 2.3: Payables
• Note 2.4: Other provisions
• Note 2.5: Special accounts

3. Funding

• Note 3.1: Appropriations

4. People and relationships

• Note 4.1: Employee provisions
• Note 4.2: Key management personnel remuneration
• Note 4.3: Related party disclosure

5. Managing uncertainties

• Note 5.1: Financial Instruments

6. Other information

• Note 6.1: Aggregate assets and liabilities

7. Note 7: Explanations of major variances between budget and actual

1. Departmental financial performance

Note 1.1: Expenses

Note 1.1A: Employee benefits

Accounting Policy

Accounting policies for employee related expenses: refer Note 4.1 employee provisions.

Note 1.1B: Supplies

Leasing commitments

Accounting Policy

Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the leased asset. The ACIC leases office accommodation, motor vehicles and other equipment under operating lease agreements.

Note 1.1C: Secondees and services provided by state, territory and other Commonwealth agencies

Note 1.2: Own-source revenue

Note 1.2A: Rendering of services

Accounting Policy

Rendering of services

Revenue from rendering of services is recognised by reference to the stage of completion of services at the reporting date. The revenue is recognised when:

a) the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and

b) the probable economic benefits associated with the transaction will flow to ACIC.

The stage of completion of services at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Note 1.2B: Other revenue

Accounting Policy

Resources received free of charge

Resources received free of charge are recognised as revenue when, and only when a fair value can be reliably measured and the services or transferred assets would have been purchased if they had not been provided free of charge. Use of those resources is recognised as appropriate as an expense or as an asset when received.

Note 1.2C: Revenue from Government

Accounting Policy

Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the ACIC gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

2. Departmental financial position

Note 2.1: Financial assets

Note 2.1A: Cash and cash equivalents

Note 2.1B: Trade and other receivables

Accounting Policy

Trade and other receivables

Trade receivables and other receivables are held for the purpose of collecting the contractual cash flows of principal and interest at market interest rates. They are subsequently measured at amortised cost using the effective interest method, adjusted for any loss allowance.

Note 2.2: Non-financial assets

Note 2.2A: Reconciliation of the opening and closing balances of leasehold improvements, property, plant and equipment and intangibles

There are no leasehold improvements expected to be sold or written-off of within the next 12 months.

The ACIC uses market approach and current replacement costs fair value measurement techniques to measure the fair value of property, plant & equipment and uses current replacement costs to measure the fair value of leasehold improvements.

An independent desktop valuation was conducted in accordance with the revaluation policy stated in Note 2.2A by an independent valuer on leasehold improvements and property, plant and equipment (a full valuation of the leasehold improvements and property, plant and equipment was conducted in June 2018).

Capital commitments

As at the 30 June 2019 the ACIC had capital commitments for information technology solutions, specialised and non-specialised property, plant and equipment.

Accounting Policy

Asset recognition

Property, plant and equipment costing greater than $5,000, leasehold improvements costing greater than $25,000, intangible assets purchased externally costing greater than $5,000 and intangible assets purchased and modified or developed internally costing greater than $20,000 are capitalised. Items costing less than these thresholds are expensed in the year of acquisition.

Leasehold improvements

Leasehold improvements include office furniture and fit-out acquired as part of the lease of office accommodation. The depreciable amount of these assets is progressively allocated over the unexpired period of the lease or the useful lives of the improvements, whichever is the shorter.

Revaluations

Following initial recognition at cost, property, plant and equipment and leasehold improvements are carried at fair value. Carrying values of the assets are reviewed every third year to determine if an independent valuation is required. The regularity of independent valuations depends on the volatility of movements in the 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 is 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 reverse a previous revaluation increment for that class. Upon revaluation, any accumulated depreciation is eliminated against the gross carrying amount of the asset.

Depreciation

Depreciable property, plant and equipment assets are written off to their estimated residual values over their estimated useful life using the straight line method of depreciation. Leasehold improvements are depreciated over the life of the lease term. 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 expected useful lives, unless an individual asset is assessed as having a different useful life.

Intangibles

Intangible assets comprise internally developed software and externally purchased software. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software licences with the renewable term ending beyond 30 June 2019 are treated as prepayments at the time of purchase and expensed over the term of the prepayment.

Impairment

All assets were assessed for impairment at 30 June 2019. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

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.

Significant accounting judgements and estimates

In the process of applying the accounting policies listed in this note, the ACIC has made assumptions or estimates in measuring the fair value of the assets that have the most significant impact on the amounts recorded in the financial statements. The fair value of the ACIC’s leasehold improvements and property, plant and equipment has been taken to be the market value or current replacement costs as determined by an independent valuer. In some instances, the ACIC’s leasehold improvements are purpose-built and some specialised property, plant and equipment may in fact realise more or less in the market.

Note 2.3: Payables

Note 2.3A: Suppliers

Note 2.3B: Other payables

Accounting Policy

Financial liabilities

Supplier and other payables are classified as financial liabilities measured 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 other payables are derecognised on payment.

Note 2.4: Other provisions

Note 2.5: Special accounts

Note 2.5A: National Policing Information Systems and Services Special Account¹

The purposes of the NPISS Special Account are defined by section 59E of the Australian Crime Commission Act and are:

(a) paying for scoping, developing, procuring, implementing and operating information technology systems and services in connection with the national policing information functions;

(b) paying or discharging the costs, expenses and other obligations incurred by the Commonwealth in the performance of the national policing information functions;

(c) paying any remuneration and allowances payable to any person under this Act in relation to the national policing information functions;

(d) meeting the expenses of administering the Account;

(e) repaying to a State all or part of an amount received from the State in connection with the performance of national policing information functions, if it is not required for a purpose for which it was paid;

(f) paying refunds in accordance with section 15A;

(g) reducing the balance of the Account (and therefore the available appropriation for the Account) without making a real or notional payment.

The National Policing Information Systems and Services Special Account (NPISS Special Account) was initially established by the Financial Management and Accountability Determination 2006/0 —National Policing Information Systems and Services Special Account Establishment 2006.

The account is a special account for the purpose of the Public Governance Performance and Accountability Act 2013.

3. Funding

Note 3.1: Appropriations

Note 3.1A: Annual appropriations ('recoverable GST exclusive')

Note 3.1B: Unspent annual appropriations ('recoverable GST exclusive')

4. People and relationships

Note 4.1: Employee provisions

Note 4.1A: Employee provisions

Accounting Policy

Liabilities for ‘short-term employee benefits’ and termination benefits expected within twelve months of the end of reporting period are measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. The liability for long service leave has been determined by reference to Financial Reporting Rule 32 using the short-hand method. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Significant accounting judgements and estimates

In the process of applying the accounting policies listed in this note, the ACIC has made assumptions or estimates in measuring the staff leave provisions that have the most significant impact on the amounts recorded in the financial statements.

Leave provisions involve assumptions based on the expected tenure of existing staff, patterns of leave claims and payouts, future salary movements and future discount rates.

Separation and redundancy

Provision is made for separation and redundancy benefit payments. The ACIC recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the termination.

Superannuation

The ACIC staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) or the PSS accumulation plan (PSSap) or other superannuation funds held outside the Australian Government. A small number of staff are members of employee nominated superannuation funds, as allowed under the ACIC's enterprise agreement. The PSSap and other employee nominated superannuation funds are defined contribution schemes. The CSS and PSS are defined benefit schemes for the Australian Government. The liabilities for defined benefit schemes are recognised in the financial statements of the Australian Government and are settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes. The ACIC makes employer contributions to the employees’ defined benefit superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government. The ACIC accounts for the contributions as if they were contributions to defined contribution plans. The liability for superannuation recognised as at 30 June 2019 represents outstanding contributions for the final fortnight of the year.

Note 4.2: Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity. The ACIC has determined the key management personnel positions to be the Chief Executive Officer, Chief Operating Officer and the three Executive Directors. The key management personnel remuneration excludes the remuneration and other benefits of the Minister. The Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the ACIC. Key management personnel remuneration is reported in the table below:

Note 4.2: Key management personnel remuneration

Note 4.3: Related party disclosure

Related party relationships:

The ACIC is an Australian Government controlled entity. Related parties of the ACIC comprise the Ministers responsible for the ACIC, other Cabinet Ministers, other Australian Government entities, the key management personnel of the ACIC, and parties related to the ACIC's key management personnel (including close family members and entities controlled by themselves, their close family members or jointly with close family members).

Transactions with related parties:

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes. These transactions have not been separately disclosed in this note.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the entity, it has been determined that there are no related party transactions requiring disclosure.

5. Managing uncertainties

Note 5.1: Financial Instruments

Note 5.1A: Categories of financial instruments

Changes with the implementation of AASB 9

ACIC was reporting financial assets at amortised cost under the AASB 139 as loans and receivables. However, under the AASB 9 it has been reclassified as financial assets at amortised cost. AASB 9 did not have any impact to financial liability disclosure.

Based on the receivable management history and the current debtor management process, the ACIC assessed the risk of impairment as nil.

6. Other information

Note 6.1: Aggregate assets and liabilities

Note 7: Explanations of major variances between budget and actual

The following are explanations of events that have impacted on the ACIC’s operations and activities for the year.

Budget numbers are sourced from the ACIC’s Portfolio Budget Statements 2018–19 and are provided in the primary statements. Budgeted numbers are not audited.

Major variances are those deemed relevant or most significant to an analysis of the ACIC’s performance by management, not focussed merely on numerical differences between the actual and budgeted amounts.

When providing explanations, the ACIC has identified the financial impact in relation to those key aggregates relevant to the ACIC’s performance. Users should be aware that there will be consequential impacts on related statements i.e. a variance in the Statement of Comprehensive Income is likely to have consequential impacts in the Statement of Financial Position and the Cash Flow Statement.