Objectives of AFMA
The Australian Fisheries Management Authority (AFMA) is an Australian Government controlled entity. It is a not-for- profit entity. The objectives of AFMA are to pursue the implementation of efficient and cost effective fisheries management consistent with the principles of ecologically sustainable development and maximising the net economic returns for the Australian community from the management of Australian fisheries for which the Commonwealth has legislative responsibilities.
AFMA has a single outcome: Ecologically sustainable and economically efficient Commonwealth fisheries, through understanding and monitoring Australia's marine living resources and regulating and monitoring commercial fishing, including domestic licensing and deterrence of illegal foreign fishing. All of the financial information contained in these financial statements were incurred in pursuit of this outcome.
The activities contributing toward this outcome are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by AFMA in its own right. Administered activities involve the management or oversight by AFMA, on behalf of the Government, of items controlled or incurred by the Government.
Administered activities for AFMA involve the caretaking and disposal of illegal foreign fishing vessels.
Basis of Preparation of the Financial Statements
The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.
The Financial Statements have been prepared in accordance with:
- Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
- Australian Accounting Standards and Interpretations - Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.
The financial statements have been prepared on an accrual basis and in accordance with 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 thousand dollars unless otherwise specified.
The continued existence of AFMA in its present form and with its present programs is dependent on Government policy and on continuing appropriations by Parliament for AFMA's administration and programs. Based on the key assumptions of continued appropriation funding from Government as the primary funding source of AFMA, management expects to continue operations as a going concern for the foreseeable future.
Each financial year AFMA, in accordance with the Australian Government Cost Recovery Guidelines, prepares a cost recovery budget to recover the costs of Commonwealth fisheries management from fishing concession holders through the imposition of levies. AFMA’s Cost Recovery Implementation Statement (CRIS) outlines what cost recoverable activities AFMA provides and how those activities are implemented in managing Commonwealth fisheries. AFMA levies are calculated based on the cost recovered budget for the coming financial year, plus or minus any under or over spend in the previous financial year and take into account any revenue collected through fee-for-service charges.
AFMA collects levy amounts prescribed under the Fishing Levy Amendment (2019-20 Levy Amounts) Regulations 2019 (Fishing Levy) and the Fisheries Levy (Torres Strait Prawn Fishery) Amendment (Levy Amount) Regulations 2019 (TSPF Levy). Amounts prescribed in the Fishing Levy are collected in three equal instalments in January, April and May, whilst amounts prescribed in the TSPF levy is collected in one instalment in April.
The accounting treatment of levies has been amended in 2019-20, with levies transferred from Revenue from Government (special appropriations) to own-source income. This treatment reflects that levies are collected from Commonwealth concessional holders and credited to the AFMA Special Account, aligning with the budget treatment.
Levy Relief Package
The impacts of Covid-19 on Commonwealth fisheries has been particularly severe, with the fishing industry being one of the first hit when access to overseas markets was significantly reduced in January 2020. The Australian Government provided around $10.3 million to AFMA in order to waive any further levies for all Commonwealth fisheries for the remainder of the 2019-20 year. Funding to support the government’s announcement was provided under the Assistance for Severely Affected Regions (Special Appropriation) (Coronavirus Economic Response Package) Bill 2020.
The levy relief announcement provided for relief for Commonwealth concession holders from payment of:
- April and May instalments prescribed under the Fishing Levy; and
- April instalments prescribed under the TSPF Levy.
The legislative implementation of the package involved seeking approval from the Finance Minister to:
- the waiver of levy instalment amounts outstanding pursuant to section 63 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) totalling some $7.9 million; and
- act of grace payments on behalf of the Commonwealth pursuant to section 65 of the PGPA Act for levy amounts already receipted for relevant levy instalments totalling some $2.5 million.
Approvals under PGPA Act s63 and s65 were received from the Assistant Minister for Finance, Charities and Electoral Matters on 8 May 2020.
AFMA worked with its Commonwealth concession holders to ensure the timely refund of levy instalment amounts already paid, some $2.5 million. All Commonwealth concession holders were refunded before 30 June 2020. All debt waivers, totalling some $7.9 million were processed in May 2020. Refer to Budgetary Reporting in Departmental primary statements for details.
New Accounting Standards
Nature of change in accounting policy, transitional provisions1, and adjustment to financial statements
AASB 15 Revenue from Contracts with Customers / AASB 2016-8 Amendments to Australian Accounting
Standards – Australian Implementation Guidance for Not-for-Profit Entities and AASB 1058 Income of Not-For-Profit Entities
AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019.
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received.
There was no material impact as a result of the introduction of these standards.
AASB 16 Leases
AASB 16 became effective on 1 July 2019. This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.
Application of AASB 16 Leases
AFMA adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.
AFMA elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.
AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. AFMA applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:
- Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
- Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and
- Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.
As a lessee, AFMA previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, AFMA recognises right-of-use assets and lease liabilities for most leases. However, AFMA has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.
On adoption of AASB 16, AFMA recognised right-of-use assets and lease liabilities in relation to leases of office space, heavy equipment and automobiles, which had previously been classified as operating leases.
The lease liabilities were measured at the present value of the remaining lease payments, discounted using AFMA's incremental borrowing rate as at 1 July 2019. AFMA's incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.17%.
The right-of-use assets were measured as follows:
a) Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.
Impact on transition
On transition to AASB 16, AFMA recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below:
1 July 2019
Right-of-use assets - property, plant and equipment
Net impact of adjustments to lease incentives, liabilities and makegood assets / provisions
The following table reconciles the Departmental minimum lease commitments disclosed in the entity's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:
1 July 2019
Minimum operating lease commitment at 30 June 2019
Less: short-term leases not recognised under AASB 16
Less: low value leases not recognised under AASB 16
Less: effect of extension options not reasonably certain to be exercised
Undiscounted lease payments
Less: effect of discounting using the incremental borrowing rate as at the date of initial application
Lease liabilities recognised at 1 July 2019
AFMA is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).
Revenues, expenses and assets and liabilities are recognised net of GST except:
- where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
- for receivables and payables.
Reporting of Administered Activities
Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the schedules of administered items and related notes.
Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.
Administered Cash Transfers to and from the Official Public Account
Revenue collected by AFMA for use by the Government rather than AFMA is administered revenue. Collections are transferred to the Official Public Account maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by AFMA on behalf of the Government and reported as such in the statement of cash flows in the schedule of administered items and in the administered reconciliation schedule.
Events After the Reporting Period
There have been no significant subsequent events after the reporting period that impact on the financial statements for the year ended 30 June 2020.