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 AEC 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.

Appropriations

Total Revenue from Government

1.1B: Annual Appropriations ("recoverable GST exclusive")

Ordinary annual services

Annual appropriation

Operating

Total operating appropriation

Total

Appropriation applied

Capital

Total capital appropriation applied

Total appropriation applied

Variance^1,2

1. Operating appropriation applied includes the utilisation of existing cash of $11.7m to support the six by-elections held in 2018-19. This is subject to departmental funding supplementation in the 2019-20 financial year.

2. The variance relates to the timing of the federal election and associated receipt/payment of invoices. This will be drawn down early in the 2019-20 financial year to pay supplier liabilities.

1.1C: Unspent Annual Appropriations ('Recoverable GST exclusive')

Departmental

Cash and cash equivalents

Total Cash and cash equivalents

Appropriations Receivable

Total Appropriations Receivable

Total departmental

1. Includes $4m of appropriations that are quarantined and unavailable for AEC use.

1.1D: Special Appropriations ('Recoverable GST exclusive')

Commonwealth Electoral Act 1918 (Departmental)

Commonwealth Electoral Act 1918 (Administered)

Total special appropriations applied

No entities spent money from the Consolidated Revenue Fund on behalf of the AEC.

1.2A: Sale of Goods and Rendering of Services

Sale of goods¹

Rendering of services

Total sale of goods and rendering of services

1. Sale of goods represents revenue received from state governments for the management of the electoral roll.

Accounting Policy

Revenue from the sale of goods is recognised when:

a. the risks and rewards of ownership have been transferred to the buyer; and

b. the AEC retains no managerial involvement or effective control over the goods.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date compared with 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 the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

1.2B: Other Revenue

Other

Resources received free of charge

Total 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 determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

1.2C: Gains

Makegood Gains

Gains from sale of assets

Total gains

Services for other Entities and Trust Monies (SOETM)

Balance brought forward from previous period

Increases

Total increases

Available for payments

Decreases

Administered

Total Administered

Total decreases

Total balance carried to the next period

Balance represented by:

Cash held in AEC bank accounts

Cash held in the Official Public Account

1. Appropriation: Public Governance, Performance and Accountability Act 2013 section 80.

Establishing Instrument: Financial Management and Accountability Act 1997 section 20.

Purpose: for the expenditure of monies temporarily held in trust or otherwise for the benefit of a person other than the Commonwealth. For example, candidate deposits.

2. The entity has a services for other entities and trust monies special account. This account was established under section 78 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) Determination 2012/04 dated 30 May 2012. For the year ended 30 June 2019 the account has a balance of $4,273k.

3. The closing balance of special account services for other Entities and Trust Monies (SOETM) includes amounts held in trust: $4,273k in 2019, and $1,328k in 2018. See 5.6A Assets Held in Trust for more information.

Net cash appropriation arrangements ¹

Total comprehensive income/(loss) less depreciation/amortisation expenses previously funded through revenue appropriations ²

Plus: depreciation/amortisation expenses previously funded through revenue appropriation

Total comprehensive (loss) / income - as per the Statement of Comprehensive Income

1. From 2010-11, the Government introduced net cash appropriation arrangements where revenue appropriations for depreciation/amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations. Capital budgets are to be appropriated in the period when cash payment for capital expenditure is required.

2. The AEC's loss is a result of the conduct of six by-elections during the 2018-19 financial year. The AEC's ongoing annual funding model does not support the delivery of by-elections due to their unpredictable nature. As a result it is normal business for the AEC to seek departmental funding supplementation each time a by-election is delivered. The AEC has secured departmental funding supplementation of $11.7m through its 2019-20 appropriations to cover the costs of the six by-elections.

FINANCIAL ASSETS UNDER AASB 139

Loans and receivables

Total loans and receivables

FINANCIAL ASSETS UNDER AASB 9

Cash and cash equivalents

Receivables

Total financial assets at amortised cost

FINANCIAL LIABILITIES

Financial liabilities measured at amortised cost

Total financial liabilities measured at amortised cost

Total financial liabilities

Credit terms for goods and services were within 30 days (2018: 30 days). Settlement of suppliers payable is usually made within 30 days.

Nil movement in Impairment allowance for the period (2018: $10,000) has been recognised in relation to loans and receivables and included in the net cost of service. $16,892 (2018: $4,000) has been written off.

Classification of financial assets on the date of initial application of AASB 9.

AASB 139 original classification

Cash and Cash Equivalents

Amortised Cost

Amortised Cost

Total financial assets

Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9

Financial assets class

Financial assets at amortised cost

Cash and Cash Equivalents

Trade receivables

Total amortised cost

1. There was NIL change in the carrying amount based on the measurement under AASB 139. The change in measurement on transition to AASB 9 is NIL.

2. There are no changes in classification and measurement of financial liabilities.

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, the entity 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.

The classification depends on both the entity's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity becomes a party to the contract and, as a cosequence, 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.

Comparatives have not been restated on initial application.

Financial Assets at Amortised Cost

Financial assets included in this category need to meet two criteria:

1. the financial asset is held in order to collect the contractual cash flows; and

2. the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.

Amortised cost is determined using the effective interest method.

Effective Interest Method

Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12-month expected credit losses if risk has not increased.

The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses.

A write - off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.

Financial liabilities are classified as either financial liabilities 'at fair value through profit or loss' or other financial liabilities. Financial liabilities are recognised and derecognised upon 'trade date'.

Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liablility.

Financial Liabilities at Amortised Cost

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).

2.2A: Appropriation Receivable

Appropriation receivables

Total Appropriation receivable

Statutory receivables

Comcare payments

Total other receivables

Other Receivables are not past due or impaired.

Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2019

As at 1 July 2018

Gross book value

Accumulated depreciation, amortisation and impairment

Total as at 1 July 2018

Additions

Revaluations and impairments recognised in other comprehensive income

Depreciation and amortisation

Disposals

Total as at 30 June 2019

Total as at 30 June 2019 represented by

Gross book value

Accumulated depreciation, amortisation and impairment

Total as at 30 June 2019 represented by

1. The carrying amount of computer software included $14,706,891 of purchased software and $3,156,382 of internally generated software.

2. Leased Plant & Equipment is measured at cost less depreciation.

No indicators of impairment were found for property, plant and equipment and intangibles (2018: nil).

No property, plant and equipment and intangibles are expected to be sold or disposed of within the next 12 months.

Non-financial assets

Leasehold improvements

Plant and equipment

1. Fair value measurements occur each financial year.

2. There are no changes in valuation techniques.

3. The remaining assets and liabilities reported by the AEC are not measured at fair value in the Statement of Financial Position.

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. 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, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

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 ‘makegood’ provisions in property leases taken up by the AEC where there exists an obligation to restore the property to its original condition. These costs are included in the value of the AEC’s leasehold improvements with a corresponding provision for 'make good' recognised.

Revaluations

Following initial recognition at cost, 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 depended 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 plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the AEC, 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:

2018

Lesser of lease term/useful life

Lesser of lease term/useful life

5 to 10 years

5 to 10 years

3 to 5 years

3 to 5 years

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.

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

Derecognition

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Intangibles

The AEC's intangibles comprise internally developed software, purchased software and intellectual property for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets are amortised on a straight-line basis over its anticipated useful life. The useful lives of the AEC's software are 1 to 10 years (2017: 1 to 10 years) and the useful lives of the AEC's intellectual property are 0 to 4 years (2017: 0 to 4 years).

All intangible assets were assessed for indications of impairment as at 30 June 2019.

Inventories held for distribution

Total inventories

Prepayments

Total other non-financial assets

No indicators of impairment were found for other non-financial assets (2018: nil).

Salaries and wages

Superannuation

Separations and redundancies

Lease incentives

Straight-line leases

Total other payables

As at 1 July 2018

Total as at 30 June 2019

The AEC currently has 38 (2018: 32) agreements for the leasing of premises which have provisions requiring the AEC to restore the premises to their original condition at the conclusion of the lease. The AEC has made a provision to reflect the present value of this obligation.

Contingent Assets

At 30 June 2019, the AEC had no contingent assets (2018: nil).

Contingent Liabilities

At 30 June 2019, the AEC had no contingent liabilities (2018: nil).

Quantifiable Contingencies

At 30 June 2019, the AEC had no quantifiable contingencies (2018: nil).

Unquantifiable Contingencies

At 30 June 2019, the AEC had no unquantifiable contingencies (2018: nil).

Significant Remote Contingencies

The AEC has no significant remote contingencies (2018: nil).

Wages and salaries¹

Superannuation:

Leave and other entitlements

Separation and redundancies

Total employee benefits

1. The AEC engaged a significant number of additional staff on a temporary basis to deliver the 2019 federal election.

Leave

Total employee provisions

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the AEC, directly or indirectly, including any director (whether executive or otherwise) of the AEC. The AEC has determined the key management personnel to be the Electoral Commissioner, Deputy Electoral Commissioner and the two First Assistant Commissioners. Key management personnel remuneration is reported in the table below:

Short-term employee benefits

Post-employment benefits

Other long-term employee benefits

Total key management personnel remuneration expenses¹

The total number of key management personnel that are included in the above table is 4 (2018: 4).

During the year the number of positions included in key management personnel was 4 (2018:4).

1. The above key management personnel 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 AEC.

Related party relationships:

The AEC is an Australian Government controlled entity. Related parties to the AEC are Key Management Personnel, the Portfolio Minister and Executive, and other Australian Government entities.

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, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

Significant transactions with related parties can include:

● the payments of grants or loans;

● purchases of goods or services;

● receipts to provide services;

● payments for superannuation; and

● asset purchases, sales transfers or leases.

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 to be separately disclosed.

Goods and services supplied or rendered

Total goods and services supplied or rendered

Goods supplied

Services rendered

Total goods and services supplied or rendered

Other suppliers

Total other suppliers

Total suppliers

The AEC in its capacity as a lessee, leases office accommodation and storage that are effectively non‑cancellable. The lease payments can be varied periodically to take account of an annual Consumer Price Index increase, a fixed increase or a market increase. Commitments are GST inclusive where relevant.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

Within 1 year

Between 1 to 5 years

More than 5 years

Total operating lease 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 assets.

Impairment on trade and other receivables

Total impairment on financial instruments

Total other expenses

Revenue

Non-Taxation revenue

Total fees and fines

Accounting Policy

All administered revenues are revenues relating to ordinary activities performed by the AEC on behalf of the Australian Government. As such, administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed.

Fines are charged for non-voters of federal elections, by-elections and referendums. Administered fee revenue is recognised when received.

Each nomination for the Senate and the House of Representatives must be accompanied by a deposit.

Total cash and cash equivalents

The closing balance of Cash in special accounts does not include amounts held in trust:

[$4,273k in 2019 and $1,328k in 2018].

See note 1.3 Special Accounts and 5.6A Assets Held in Trust for more information.

2018

$000

Trade creditors and accruals

-

Total suppliers

Settlement of suppliers payable is usually made within 30 days.

Categories of Financal Instruments

Financial Assets under AASB 9

Financial assets at amortised cost

Total financial assets at amortised cost

Total financial assets

Financial Liabilities

Financial liabilities measured at amortised cost

Total financial liabilities measured at amortised cost

Total financial liabilities

Classification of financial assets on the date of initial application of AASB 9.

Cash and Cash Equivalents

Amortised Cost

Amortised Cost

Total financial assets

AEC did not have any administered Financial assets or liabilities as at 30 June 2018, and did not have any changes in carrying amounts based on the transition to AASB 9.

Receivables (net) are expected to be recovered within 30 days (2018: within 30 days)

Credit terms for goods and services were within 30 days (2018: 30 days). Settlement of suppliers payable is usually made within 30 days.

There are no administered contingencies, remote or quantifiable, for the AEC (2018: nil).

5.6A: Assets Held in Trust

The trust account holds the roll objections, and candidate deposits. When certain conditions are met the funds are returned.

Candidate Deposits

As at 1 July

Receipts

Payments

Total as at 30 June

Total monetary assets held in trust

Non-monetary assets

There are nil non-monetary assets held in trust

Assets expected to be recovered in:

Total assets

Liabilities expected to be settled in:

Total liabilities

Assets expected to be recovered in:

No more than 12 months

Total assets

Liabilities expected to be settled in:

No more than 12 months

Total liabilities