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Audited financial statements

Independent Auditor's Report

 • Statement by the Chair of the Board, Chief Executive and Chief Financial Officer; • Statement of Comprehensive Income; • Statement of Financial Position; • Statement of Changes in Equity; • Cash Flow Statement; and • Notes to and forming part of the financial statements, comprising a summary of significant accounting policies and other explanatory information. Basis for opinion I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Entity in accordance with the relevant ethical requirements for financial statement audits conducted by the Auditor-General and his delegates. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) to the extent that they are not in conflict with the Auditor-General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Accountable Authority’s responsibility for the financial statements As the Accountable Authority of the Entity, the Chair of the Board is responsible under the Public Governance, Performance and Accountability Act 2013 (the Act) for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards – Reduced Disclosure Requirements and the rules made under the Act. The Chair of the Board is also responsible for such internal control as the Chair of the Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Chair of the Board is responsible for assessing the ability of the Entity to continue as a going concern, taking into account whether the Entity’s operations will cease as a result of an administrative restructure or for any other reason. The Chair of the Board is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the assessment indicates that it is not appropriate. GPO Box 707, Canberra ACT 2601 38 Sydney Avenue, Forrest ACT 2603 Phone (02) 6203 7300
 • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control; • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority; • conclude on the appropriateness of the Accountable Authority’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern; and • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. I communicate with the Accountable Authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. Australian National Audit Office Rahul Tejani Executive Director Delegate of the Auditor-General Canberra 09 September 2021

Statement by the Chair of the Board, Chief Executive and Chief Financial Officer

In our opinion, the attached financial statements for the year ended 30 June 2021 comply with subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act. In our opinion, at the date of this statement, there are reasonable grounds to believe that the Australian Digital Health Agency will be able to pay its debts as and when they fall due. This statement is made in accordance with a resolution of the Australian Digital Health Agency Board Members. Signed by Elizabeth Deveny, Board Chair, Accountable Authority, Amanda Cattermole, Chief Executive Officer and Steven Momcilovic, Chief Financial Officer on 08 September 2021.

Statement of Comprehensive Income

Statement of Comprehensive Income for the period ended 30 June 2021

ACTUAL

2021

2020

Original Budget

Notes

$'000

$'000

$'000

NET COST OF SERVICES

Expenses

Employee Benefits

1.1A

36,963

34,288

37,286

Suppliers

1.1B

167,608

175,444

188,478

Depreciation and Amortisation

2.2A

33,207

37,703

39,784

Finance Costs

1.1C

153

193

153

Write-Down and Impairment of Assets

1.1D

65

2,275

0

Total expenses

237,996

249,903

265,701

Own-Source Income

Own-Source Revenue

Contributions from Jurisdictions

1.2A

29,750

34,280

32,250

Interest

1.2B

139

367

0

Rental Income

1.2C

0

171

0

Other Revenue

1.2D

5,119

9,587

0

Other Gains

582

195

0

Total own-source revenue

35,590

44,600

32,250

Net cost of services

(202,406)

(205,303)

(233,451)

Revenue from Government

1.2E

195,392

178,613

183,120

(Deficit) attributable to the Australian Government

(7,014)

(26,690)

(50,331)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation surplus

491

0

0

Total other comprehensive income

491

0

0

Total comprehensive (loss) attributable to the Australian Government

(6,523)

(26,690)

(50,331)

The above statement should be read in conjunction with the accompanying notes.

Budget Variances Commentary

Expenses

Lower than budgeted suppliers $20.9 million primarily relate to reduction in costs for Services Australia arrangements. Decreased depreciation and amortisation costs $6.6 million relate to the extension of the My Health Record (MHR) useful life by one year, lower than budgeted capital expenditure, and the timing of assets being moved to ‘in use’. No impairment losses have been recognised for 2020-21.

Revenue

Contribution from Jurisdictions $2.5 million lower than budget relates to return of unspent funding from prior year to state/ territory jurisdictions. Increase in other revenue $5.1 million relates to unbudgeted revenue from Department of Health in relation to the Electronic Prescribing Project (EPP), and from Home Affairs for the Global Switch Ultimo (GSU) Exit Program. Increased revenue from government $12.3 million relates to Portfolio Additional Estimates (PAES) appropriations for COVID-19 vaccine implementation and rollout.

An operating loss was approved for 2020-21 for the allowance for depreciation/amortisation, consistent with previous years. This operating loss was approved by the Minister of Health and Minister of Finance. There is no impact on the financial sustainability of the Australian Digital Health Agency (the Agency) resulting from the operating loss in 2020-21.

Statement of Financial Position

Statement of Financial Position as at 30 June 2021

ACTUAL

2021

2020

Original Budget

Notes

$'000

$'000

$'000

ASSETS

Financial Assets

Cash and Cash Equivalents

2.1A

106,282

85,427

69,927

Trade and Other Receivables

2.1B

4,561

8,068

8,068

Total financial assets

110,843

93,495

77,995

Non-Financial Assets

Leasehold Improvements

2.2A

4,582

3,746

3,170

Right of use Assets

2.2A

12,178

15,379

11,595

Plant and Equipment

2.2A

1,722

2,554

820

Intangibles

2.2A

61,527

75,575

58,143

Other Non-Financial Assets

2.2B

1,955

6,426

6,426

Total non-financial assets

81,964

103,680

80,154

Total assets

192,807

197,175

158,149

LIABILITIES

Payables

Suppliers

2.3A

32,455

42,802

42,802

Other Payables

2.3B

1,051

671

671

Total payables

33,506

43,473

43,473

Interest bearing liabilities

Leases

2.4A

13,525

17,677

13,524

Total interest bearing liabilities

13,525

17,677

13,524

Provisions

Employee Provisions

3.1A

8,689

7,887

7,887

Other Provisions

3.1B

312

298

298

Total provisions

9,001

8,185

8,185

Total liabilities

56,032

69,335

65,182

Net assets

136,775

127,840

92,967

EQUITY

Contributed Equity

186,277

170,819

186,277

Reserves

16,267

15,776

15,776

Retained Surplus / (Accumulated Deficit)

(65,769)

(58,755)

(109,086)

Total equity

136,775

127,840

92,967

The above statement should be read in conjunction with the accompanying notes.

Budget Variances Commentary

Assets

Total assets were higher than budgeted partially due to increases in the amount of cash held at 30 June. This includes $12.3 million PAES appropriation funding for COVID-19 vaccine implementation and rollout and the impact of supplier underspends including for Services Australia arrangements.

Liabilities

Total liabilities were lower than budgeted mainly due to the reduction in suppliers and leases payables $10.3 million. This was slightly offset by an increase in employee provisions $0.8 million.

Equity

Equity is largely in line with expectations. The $43.3 million variance in retained earnings arises as the Agency had budgeted for an operating loss of $50.3 million for 2020-21 compared to an actual loss of $7.0 million being recorded. Variance commentary around the loss is included as part of the Statement of Comprehensive Income.

Statement of Changes in Equity

Statement of Changes in Equity for the period ended 30 June 2021

ACTUAL

2021

2020

Original Budget

$'000

$'000

$'000

CONTRIBUTED EQUITY/CAPITAL

Opening balance

Balance carried forward from previous period

170,819

150,419

170,819

Adjusted opening balance

170,819

150,419

170,819

Transactions with owners

Contributions by owners

Equity injection - Appropriations

15,458

20,400

15,458

Total transactions with owners

15,458

20,400

15,458

Closing balance as at 30 June

186,277

170,819

186,277

RETAINED EARNINGS

Opening balance

Balance carried forward from previous period

(58,755)

(33,091)

(58,755)

Adjustment on initial application of AASB 161

0

1,026

0

Adjusted opening balance

(58,755)

(32,065)

(58,755)

Comprehensive income

(Deficit) for the period

(7,014)

(26,690)

(50,331)

Total comprehensive income

(7,014)

(26,690)

(50,331)

Closing balance as at 30 June

(65,769)

(58,755)

(109,086)

ASSET REVALUATION RESERVE

Opening balance

Balance carried forward from previous period

776

776

776

Other comprehensive income2

491

0

0

Closing balance as at 30 June

1,267

776

776

CASH RESERVE

Opening balance

Balance carried forward from previous period

15,000

15,000

15,000

Closing balance as at 30 June

15,000

15,000

15,000

TOTAL EQUITY

Opening balance

Balance carried forward from previous period

127,840

133,104

127,840

Adjustment on initial application of AASB 16

0

1,026

0

Adjusted opening balance

127,840

134,130

127,840

Comprehensive income

(Deficit) for the period

(7,014)

(26,690)

(50,331)

Other comprehensive income

491

0

0

Total comprehensive income

(6,523)

(26,690)

(50,331)

Transactions with owners

Contributions by owners

Equity injection - Appropriations

15,458

20,400

15,458

Total transactions with owners

15,458

20,400

15,458

Closing balance as at 30 June

136,775

127,840

92,967

The above statement should be read in conjunction with the accompanying notes.

1 Lease incentive assets, provision for lease incentive and lease straight lining have been adjusted against retained earnings on initial application of AASB 16 in 2019-20.

2 Other comprehensive income from changes in asset revaluation surplus consists of the movements from make good asset and provision for restoration per Note 3.1B in addition to revaluation movements included in Note 2.2A.

Accounting Policy

Equity Injections

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.

Cash Reserve

The purpose of this reserve is to recognise the potential costs of winding up the Agency should funding not be approved for future years. The creation and maintenance of this reserve account has been approved by the Board.

Budget Variances Commentary

Statement of Changes in Equity

Equity is largely in line with expectations. The $43.3 million variance in retained earnings arises as the Agency had budgeted for an operating loss of $50.3 million for 2020-21 compared to an actual loss of $7.0 million being recorded. Variance commentary around the loss is included as part of the Statement of Comprehensive Income.

Cash Flow Statement

Cash Flow Statement for the period ended 30 June 2021

ACTUAL

2021

2020

Original Budget

Notes

$'000

$'000

$'000

OPERATING ACTIVITIES

Cash received

Appropriations

195,392

178,613

183,120

Interest

145

424

0

Net GST received

15,257

18,540

0

Contributions from Jurisdictions

29,750

32,250

32,250

Other

9,616

6,295

0

Total cash received

250,160

236,122

215,370

Cash used

Employees

36,105

33,196

37,286

Suppliers

189,410

199,150

188,478

Interest payments on lease liabilities

153

193

153

Total cash used

225,668

232,539

225,917

Net cash flows from operating activities

24,492

3,583

(10,547)

INVESTING ACTIVITIES

Cash received

Investments1

50,000

50,000

0

Total cash received

50,000

50,000

0

Cash used

Purchase of property, plant and equipment2

14,946

19,602

16,258

Investments1

50,000

50,000

0

Total cash used

64,946

69,602

16,258

Net cash flows (used by) investing activities

(14,946)

(19,602)

(16,258)

FINANCING ACTIVITIES

Cash received

Contributed Equity

15,458

21,970

15,458

Total cash received

15,458

21,970

15,458

Cash used

Principal payments of lease liabilities

4,149

3,935

4,153

Total cash used

4,149

3,935

4,153

Net cash flows from financing activities

11,309

18,035

11,305

Net increase in cash held

20,855

2,016

(15,500)

Cash and cash equivalents at the beginning of the reporting period

85,427

83,411

85,427

CASH AND CASH EQUIVALENTS AT THE END OF PERIOD

2.1A

106,282

85,427

69,927

The above statement should be read in conjunction with the accompanying notes.

1 Investments relate to short term deposits with financial institutions.

2 Excludes right of use assets included in Note 2.2A.

Budget Variances Commentary

Cash Flow Statement

Cash received from operating activities was higher than budget which is consistent with $12.3 million PAES appropriation revenue for COVID-19 vaccine implementation and rollout, receipt of prior year trade receivables and additional funding received for the EPP and GSU Exit program, offset by a $2.5 million decrease in contributions from jurisdictions relating to the return of unspent funding from prior year to state/ territory jurisdictions.

Overview

Objectives of the Agency

The Australian Digital Health Agency (the Agency) is an Australian Government controlled corporate Commonwealth Agency established by the Public Governance, Performance and Accountability (Establishing the Australian Digital Health Agency) Rule 2016 (the Rule).

The Agency was established as a Corporate Commonwealth Agency on 30 January 2016 following registration of the rule on 29 January 2016 and commenced operations on 1 July 2016. All assets and liabilities of National E- Health Transition Authority and My Health Record system operation activities managed by the Department of Health transferred to the Agency on that date.

The Agency has responsibility for the strategic management and governance for the National Digital Health Strategy and the design, delivery and operations of the national digital healthcare system including the MHR system. It provides the leadership, coordination and delivery of a collaborative and innovative approach to utilising technology to support and enhance a clinically safe and connected national health system.

The Agency is structured to meet the following outcome:

Outcome 1: To deliver national digital healthcare systems to enable and support improvement in health outcomes for Australians

The continued existence of the Agency in its present form and with its present programs is dependent on:

  • Government policy and on continued funding by the Australian Government for the Agency’s administration and programs relating to the MHR functions, extending the 2017-18 Budget measure titled My Health Record — continuation and expansion.
  • Funding from the Australian Government, states and territories received pursuant to the Inter-Governmental Agreement signed in October 2018, and on any future such agreements.

The Basis of Preparation

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

The financial statements have been prepared in accordance with:

  1. Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) for reporting periods ending on or after 1 July 2015 and
  2. 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 the 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 $’000 unless otherwise specified.

Going Concern and COVID-19 Impacts

The financial statements have been prepared on a going concern basis. As per the 2021-22 Department of Health Portfolio Budget Statements (PBS), the Agency is resourced to 2022-23. The Government continues to publicly support the Agency’s objectives, and the Council of Australian Governments (COAG) Intergovernmental Agreement on National Digital Health is in place until 30 June 2022. As such, the Agency continues to operate as a going concern until such time as a formal decision is made not to proceed with Agency activities.

In 2020-21, COVID-19 has had significant health and economic impacts on a global scale. The Agency has assessed the potential impacts of COVID-19 on its operations, including as part of reviewing the impairment of fixed assets, and there is no material impact to items presented in these accounts.

Significant Accounting Judgements and Estimates

Assumptions or estimates have been made in the following areas that have the most significant impact on the amounts recorded in the financial statements:

  • The fair value of property, plant and equipment is assessed at market value or current replacement costs as determined by an independent valuer. Valuation was reported on the basis of significant market uncertainty due to COVID-19 global pandemic. “Market uncertainty” means less certainty can be attached to the valuation and does not mean the valuation cannot be relied upon; and
  • Leave provisions involve assumptions based on the expected tenure of staff, patterns of leave claims and payouts, future salary movements and future discount rates.
  • The Agency's intangibles comprise software licences, data sets, internally developed software for internal use and the MHR asset. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.
  • Software is amortised on a straight-line basis over its anticipated useful life which is reviewed as part of the annual impairment process.

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next twelve months.

Taxation

The Agency is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Events After the Reporting Period

The Agency has signed a major contract on 1 July 2021 totalling $18.0 million (GST inclusive) which extends over 3 years, for the provision of the Health Application Programming Interface (API) Gateway Services to support the Agency’s role as the System Operator of the MHR.

Breach of Section 83 of the Constitution

The Agency receives own-source revenue detailed in note 1.2, including appropriation made by law through Appropriation Acts and Supply Acts. No breach of Section 83 of the Constitution has been detected during 2020- 21.

1.1 Expenses

Note 1.1A: Employee Benefits

2021

2020

$'000

$'000

Wages and salaries

27,995

26,936

Superannuation

Defined contribution plans

2,957

2,815

Defined benefit plans

733

684

Leave and other entitlements

4,935

3,853

Separation and redundancies

343

0

Total employee benefits

36,963

34,288

Accounting Policy

Accounting policy for employee related expenses is contained in note 3.1.

Note 1.1B: Suppliers

2021

2020

$'000

$'000

Goods and services supplied or rendered

Consultants

1,221

1,120

Contract for services

108,426

124,838

Contractors

34,601

26,322

Travel

281

1,438

IT services

13,433

8,232

Communications

5,664

8,585

Other

3,755

4,746

Total goods and services supplied or rendered

167,381

175,281

Other suppliers

Workers compensation expenses

227

163

Total other suppliers

227

163

Total suppliers

167,608

175,444

Accounting Policy

Suppliers’ expenses

The Agency applies a $5,000 threshold for recognition of prepayments and accrued expenses.

Short-term leases and leases of low-value assets

The Agency has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (less than $10,000). The Agency recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Note 1.1C: Finance Costs

2021

2020

$'000

$'000

Interest on lease liabilities

153

193

Total finance costs

153

193

The above lease disclosures should be read in conjunction with the accompanying notes 2.2A and 2.4A.

Note 1.1D: Write-down and Impairment of Assets

2021

2020

$'000

$'000

Impairment on intangible assets1

0

1,426

Impairment on ROU assets2

0

849

Loss on disposal of assets

65

0

Total write-down and impairment of assets

65

2,275

1 The impairment relates to a write down of intangible assets at 30 June 2020.

2 The impairment relates to a reassessment of surplus lease space at 30 June 2020, refer note 2.2A.

1.2 Own-Source Revenue and Gains

Note 1.2A: Contributions from Jurisdictions

2021

2020

$'000

$'000

Own-Source Revenue

New South Wales

9,526

10,977

Victoria

7,485

8,625

Queensland

5,974

6,883

Western Australia

3,225

3,716

South Australia

2,106

2,427

Tasmania

643

740

Australian Capital Territory

488

562

Northern Territory

303

350

Total contributions from Jurisdictions

29,750

34,280

Accounting Policy

The Agency receives contributions from jurisdictions based on an agreed formula as set out in Schedule A to the Intergovernmental Agreement on National Digital Health (signed October 2018). The above contributions from states and territories of $29.8 million represents nearly half of the total contributions made under the Intergovernmental Agreement, with a further $32.3 million being contributed by the Australian Government. The latter contribution is included in Revenue from Government and is shown in note 1.2E.

Note 1.2B: Interest

2021

2020

$'000

$'000

Deposits

139

367

Total interest

139

367

Accounting Policy

Interest revenue is recognised using the effective interest method.

Note 1.2C: Rental Income

2021

2020

$'000

$'000

Property lease

0

171

Total rental income

0

171

Lease income for 2019-20 relates to a short-term sub-leasing arrangement for the Sydney Office. The above lease disclosure should be read in conjunction with the accompanying notes 2.2A and 2.4A.

Note 1.2D: Other Revenue

2021

2020

$'000

$'000

Other

5,119

9,587

Total other revenue

5,119

9,587

Currently the Agency does not derive revenue from the sale of goods and services. Other Revenue includes funding for the EPP provided by the Department of Health and GSU Exit Program provided by Home Affairs.

Note 1.2E: Revenue from Government

2021

2020

$'000

$'000

Department of Health

Corporate Commonwealth entity payment item

195,392

178,613

Total revenue from Government

195,392

178,613

Accounting Policy

Revenue from Government

Funding appropriated to the Department of Health as a corporate Commonwealth Agency payment item for payment to this Agency is recognised as revenue from the Australian Government unless the funding is in the nature of an equity injection or a loan, or goods and services revenue under AASB 15 Revenue. The Agency’s revenue from the Australian Government includes $32.3 million paid pursuant to the Intergovernmental Agreement (refer also note 1.2A).

2.1 Financial Assets

Note 2.1A: Cash and Cash Equivalents

2021

2020

$'000

$'000

Cash on hand

106,282

85,427

Total cash and cash equivalents

106,282

85,427

Accounting Policy

Cash is recognised at its nominal amount. Cash and cash equivalents include cash on hand.

Note 2.1B: Trade and Other Receivables

2021

2020

$'000

$'000

Goods and services receivables

Goods and services

811

5,004

Other receivables

198

168

GST receivable from the ATO

3,552

2,890

Interest Receivable

0

6

Total goods and services receivables

4,561

8,068

Total trade and other receivables (gross)

4,561

8,068

Total trade and other receivables (net)

4,561

8,068

The goods and services receivables are associated with amounts receivable from the Department of Health, refer Note 1.2D.

Credit terms for goods and services were within 20 days. The Agency has not provided any loans.

Accounting Policy

Financial assets

The Agency classifies its financial assets at the time of initial recognition depending on the nature and purpose of the asset. All receivables are classified as trade and other receivables and are expected to be recovered within 12 months unless otherwise indicated.

The collectability of debts are reviewed at the end of the reporting period and an impairment loss allowance is recognised.

2.2 Non-Financial Assets

Note 2.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles

Reconciliation of the opening and closing balances of property, plant and equipment, computer software and other intangibles for 2021

Leasehold Improvements

Right of Use (ROU) Assets

Plant and Equipment

Computer Software1

Other Intangibles

Total

$’000

$’000

$'000

$'000

$'000

$'000

As at 1 July 2020

Gross book value

6,991

19,431

6,188

18,134

149,379

200,123

Accumulated depreciation and amortisation

(3,245)

(4,052)

(3,634)

(10,659)

(81,279)

(102,869)

Total as at 1 July 2020

3,746

15,379

2,554

7,475

68,100

97,254

Additions

Purchased

1,459

22

510

0

0

1,991

Internally developed

0

0

0

0

12,977

12,977

Revaluation increment recognised in other comprehensive income

243

0

261

0

0

504

Reversal of impairments recognised in net cost of services2

0

581

0

0

0

581

Depreciation and amortisation

(1,054)

(3,779)

(1,315)

(3,746)

(23,313)

(33,207)

Disposals

0

(25)

(65)

0

0

(90)

Reclassification

188

0

(223)

35

0

0

Transfers

0

0

0

0

(1)

(1)

Total as at 30 June 2021

4,582

12,178

1,722

3,764

57,763

80,009

Total as at 30 June 2021 represented by:

Gross book value

4,582

20,004

2,212

17,714

161,838

206,350

Accumulated depreciation, amortisation and impairment

0

(7,826)

(490)

(13,950)

(104,075)

(126,341)

Total as at 30 June 2021

4,582

12,178

1,722

3,764

57,763

80,009

1 The carrying amount of computer software includes all purchased software. Internally generated assets are disclosed as Other Intangibles.

2 Reversal of impairments of $0.6 million for ROU assets as surplus office space is no longer sub-lettable. Other Gains consists of the reversal of impairment $0.6 million, and a gain on disposal of two car park bays from Canberra office lease in ROU assets in July 2020.

Capital commitments

The Agency has a $20.3 million contractual obligation for the MHR system improvements in the financial year 2021-22, and a $6.5 million contractual obligation for the provision of Health Gateway Services, which extends for three financial years.

Accounting Policy

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.

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 property, plant and equipment are recognised initially at cost in the Statement of Financial Position. Purchases costing less than $2,000 are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total) except for IT hardware a lower capitalisation threshold of $500 is applicable.

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 leases taken up by the Agency where there exists an obligation to make good. These costs are included in the value of the Agency’s provisions, refer note 3.1B.

Category

Capitalisation Threshold

Purchased IT hardware and IT software

$500

Leasehold improvements

$50,000

Internally developed IT software and hardware

$100,000

IT projects (software and hardware integration)

$100,000

All other property, plant and equipment

$2,000

Lease Right of Use (ROU) Assets

Leased ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted for by the Agency as separate asset classes to corresponding assets owned outright.

On initial adoption of AASB 16 the Agency has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right of use lease asset that shows indicators of impairment and an impairment loss is recognised against any right of use lease asset that is impaired. Lease ROU assets continue to be measured at cost after initial recognition.

Revaluations

Following initial recognition at cost, property, plant and equipment (excluding ROU assets) are carried at fair value (or an amount not materially different from 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 depends upon the volatility of movements in 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 reverses a previous revaluation decrement of the same asset class that was previously recognised in the Statement of Comprehensive Income. Revaluation decrements for a class of assets are recognised directly in the Statement of Comprehensive Income except to the extent that they reversed a previous revaluation increment for that asset 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.

All revaluations were conducted in accordance with the revaluation policy. An independent valuation (including impairment assessment) was performed at 30 June 2021 by JLL and no material fair value movements were identified for 2020-21.

Depreciation

Depreciable property, plant and equipment are written-off to their estimated residual values over their estimated useful lives, in all cases using the straight-line method of depreciation. Depreciation rates, 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:

Asset Class

Useful life (years)

Leasehold improvements

Length of lease

Plant and equipment

3 – 10

Computer software

2 – 5

Other intangibles

1 – 5

The depreciation rates for ROU assets are based on the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

Impairment

All assets were assessed for impairment at 30 June 2021. 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.

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 Agency were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

A reversal was made to the prior year impairment loss recognised on the ROU asset as the space is now occupied by the Agency.

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 Judgments and Estimates - Intangibles

The Agency's intangibles comprise software licences, data sets, internally developed software for internal use and the MHR asset. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life which is reviewed as part of the annual impairment process.

Note 2.2B: Other Non-Financial Assets

2021

2020

$'000

$'000

Prepayments

1,816

6,245

Make good asset1

139

181

Total other Non-Financial Assets

1,955

6,426

No indicators of impairment were found for other Non-Financial Assets.

1 Make good asset relates to office leases per agreements with landlords.

2.3 Payables

Note 2.3A: Suppliers

2021

2020

$'000

$'000

Trade creditors and accruals

32,455

42,802

Total suppliers

32,455

42,802

Note 2.3B: Other Payables

2021

2020

$'000

$'000

Salaries and wages

797

615

Superannuation

65

56

Unearned income

189

0

Total other payables

1,051

671

Accounting Policy

Trade creditors and accruals

Trade creditors and accruals are recognised at amortised cost.

Liabilities are recognised to the extent that goods and services have been received.

2.4 Interest Bearing Liabilities

Note 2.4A: Leases

2021

2020

$'000

$'000

Lease liabilities

13,525

17,677

Total leases

13,525

17,677

Total cash outflow for leases for the year ended 30 June 2021 was $4.3 million.

2021

2020

$'000

$'000

Maturity analysis - contractual undiscounted cash flows

Within 1 year

4,492

4,306

Between 1 to 5 years

9,245

13,633

More than 5 years

0

103

Total leases

13,737

18,042

The Agency in its capacity as lessee occupies the following premises:

  • Level 25 & 26, 175 Liverpool Street, Sydney
  • Level 17, 1 Eagle Street, Brisbane
  • Scarborough House, Level 6 & 7, 1 Atlantic Street, Canberra.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1C, 1.1D, 1.2C, and 2.2A.

Accounting Policy

For all new contracts entered into, the Agency considers whether the contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.

Once it has been determined that a contract is, or contains a lease, the lease liability is initially measured at the present value of the lease payments unpaid at the commencement date, discounted using the interest rate implicit in the lease, if that rate is readily determinable, or the department’s incremental borrowing rate.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification to the lease. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset or profit and loss depending on the nature of the reassessment or modification.

3.1 Employee Provisions

Note 3.1A: Employee Provisions

2021

2020

$'000

$'000

Leave

8,689

7,887

Total employee provisions

8,689

7,887

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.

Leave

The liability for employee benefits includes provision for annual leave and long service leave.

No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years is estimated to be less than the annual entitlement for sick leave.

The liability for long service leave has been determined by reference to the shorthand model provided by Department of Finance as per the FRR and Commonwealth Agency Financial Statement Guide. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. The Agency 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 terminations.

Superannuation

The Agency’s staff comprise both Australian Public Service (APS) employees and staff whose employment is subject to contracts under Common Law. Both groups of employees are reflected in the Agency’s ASL numbers.

APS staff are either 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. The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

The Agency makes employer contributions to the employees' defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Australian Government. The Agency accounts for these contributions as if they were contributions to defined benefit plans.

In respect of the other more prominent group of common law contract employees, the Agency makes employer contributions to funds held outside of the Australian Government.

The liability for superannuation recognised as at 30 June represents outstanding contributions, if any.

Note 3.1B: Other provisions

2021

2020

$'000

$'000

Provision for restoration

312

298

Total other provisions

312

298

Provision for restoration

As at 1 July

298

494

Additional provision made

182

0

Provision reversed

(168)

(196)

Total as at 30 June

312

298

The Agency currently has three agreements for the leasing of premises and two of those agreements require the Agency to restore the premises to their original condition at the conclusion of the lease. The Agency has made a provision for restoration to reflect the present value of these obligations.

Accounting Policy

Provision for Restoration Obligation

Where the Agency has a contractual obligation to undertake remedial work upon vacating leased properties, the estimated cost of that work is recognised as a liability. An equal value asset is created at the same time and amortised over the life of the lease of the underlying leasehold property.

3.2 Key Management Personnel Remuneration

Key management personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling the activities of the Agency, directly or indirectly, including any Board member (whether executive or otherwise). The Agency has determined the KMP to be Chief Executive Officer (CEO), Senior Executive Committee (SEC) members including independent advisers and Board members. KMP remuneration is reported in the table below:

2021

2020

$'000

$'000

Key management personnel remuneration expenses

Short-term employee benefits

2,564

2,629

Post-employment benefits

290

258

Other long-term employee benefits

39

46

Termination benefits

0

0

Total key management personnel remuneration expenses1

2,893

2,933

The total number of KMP that are included in the above table for 2020-21 is 21, which includes a number of cessations, acting arrangements and commencements relating to SEC positions.

1 The above KMP remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the Agency. The head count only includes KMP who received remuneration from the Agency in 2020-21.

3.3 Related Party Disclosures

The Agency is an Australian Government controlled corporate Commonwealth Agency. It has a governing Board of members, a CEO and SEC members and a Portfolio Minister.

Pursuant to AASB 124 Related Party Disclosures (AASB 124), the Agency KMP are asked to provide details of where any of their close family members, or a controlled Agency/entities has/have transacted with the Agency. Where any doubt exists, the information is to be recorded and collected in any event.

AASB 124 requires disclosure of related party relationships that include transactions where significant influence exists between the Agency and other parties. The Standard identifies that KMP have the capacity to influence the operations of the Agency, and therefore parties related to KMP become related parties to the Agency and require disclosure in the annual financial statements.

The Agency has determined that all Board members, the CEO and SEC members constitute KMP. This includes those acting in a role for three months or more continuously.

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity of ‘common citizens’. Common citizen or ‘open contest’ transactions are not requested or recorded as they reflect those transactions that may be undertaken with the Agency under the same terms and conditions as any other citizen.

The Agency transacts with other Australian Government controlled entities consistent with normal day-to-day business operations provided under normal terms and conditions, including the payment of workers compensation and insurance premiums. These are not considered individually significant to warrant separate disclosure as related party transactions.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the Agency, it has been determined that there are no related party transactions to be separately disclosed.

3.4 Remuneration of Auditors

Amounts paid or payable for audit of the financial statements 2020-21 is $120,000. (2020: $120,000).

4.1 Contingent Assets and Liabilities

Quantifiable Contingencies

The Agency had no quantifiable contingencies at reporting date.

Unquantifiable Contingencies

The Agency had no unquantifiable contingencies at reporting date.

Accounting Policy

Contingent assets and liabilities may arise from uncertainty as to the existence of an asset or liability, or where the amount cannot be reliably measured.

Contingent assets are disclosed when settlement is probable but not virtually certain.

Contingent liabilities are disclosed when settlement is greater than remote.

4.2 Financial Instruments

Note 4.2A: Categories of Financial Instruments

2021

2020

$'000

$'000

Financial assets at amortised cost

Cash and cash equivalents

106,282

85,427

Trade and Other Receivables

4,561

8,068

Total financial assets at amortised cost

110,843

93,495

Total financial assets

110,843

93,495

Financial Liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

32,455

42,802

Total financial liabilities measured at amortised cost

32,455

42,802

Total financial liabilities

32,455

42,802

Accounting Policy

Financial Assets

The Agency classifies its financial assets in the following categories:

a. financial assets at fair value through profit or loss;

b. financial assets at fair value through other comprehensive income; and

c. financial assets measured at amortised cost.

Financial assets are recognised when the Agency becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.

Interest revenue from financial assets for 2020-21 was $0.1 million (2019-2020: $0.4 million).

Financial Liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or amortised cost. Financial liabilities are recognised and derecognised upon ‘trade date’.

The Agency is exposed to minimal credit risk as loans and receivables are cash and trade receivables. The maximum exposure to credit risk was the risk that arises from potential default of a debtor. The amount was equal to the total amount of the trade receivables of $4.4 million in 2020-21 (2019-20: $8.1 million).

The Agency had no financial assets that were past due but not impaired at 30 June 2021 (2019-20: None)

4.3 Fair Value Measurement

The Agency has Leasehold Improvement and Plant and Equipment assets that are measured at fair value. The remaining assets and liabilities disclosed in the Statement of Financial Position do not apply the fair value hierarchy.

The different levels of the fair value hierarchy are defined below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Agency can access at measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

Leasehold improvements are categorised as Level 3.

Plant and equipment are categorised as Level 2 and Level 3.

Note 4.3A: Fair Value Measurement

Fair value measurements at the end of the reporting period

2021

2020

$'000

$'000

Non-financial assets

Leasehold Improvements

4,582

3,746

Plant and equipment

1,722

2,554

Total fair value measurements in the statement of financial position

6,304

6,300

Total Non-financial assets not measured at fair value in the statement of financial position

75,660

97,380

Accounting Policy

All revaluations were conducted in accordance with the revaluation policy. An independent valuation (including impairment assessment) was performed at 30 June 2021 and no material fair value movements were identified for 2020-21.

5.1 Current/non-current distinction for assets and liabilities

Note 5.1A: Current/non-current distinction for assets and liabilities

2021

2020

$'000

$'000

Assets expected to be recovered in:

No more than 12 months

Cash and cash equivalents

106,282

85,427

Trade and other receivables

4,561

8,068

Other Non-Financial Assets

1,858

6,275

Total no more than 12 months

112,701

99,770

More than 12 months

Leasehold Improvements

4,582

3,746

Right of use Assets

12,178

15,379

Plant and equipment

1,722

2,554

Intangibles

61,527

75,575

Other Non-Financial Assets

97

151

Total more than 12 months

80,106

97,405

Total assets

192,807

197,175

Liabilities expected to be settled in:

No more than 12 months

Suppliers

32,455

42,802

Other payables

1,051

671

Leases

4,381

4,154

Employee provisions

2,576

2,430

Total no more than 12 months

40,463

50,057

More than 12 months

Leases

9,144

13,523

Employee provisions

6,113

5,457

Other provisions

312

298

Total more than 12 months

15,569

19,278

Total liabilities

56,032

69,335