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Notes to and forming part of the financial statements

for the period ended 30 June 2021.

1. Financial performance

1.1: EXPENSES

2021

2020

$'000

$'000

1.1A: EMPLOYEE BENEFITS

Wages and salaries

10,852

10,074

Superannuation

Defined contribution plans

1,213

1,077

Defined benefit plans

942

716

Leave and other entitlements

824

1,263

Separation and redundancies

145

127

Total employee benefits

13,976

13,257

1.1B: SUPPLIERS

Goods and services supplied or rendered

Consultants, contractors and secondees

7,456

8,043

Community engagement and events

1,410

635

Information technology

956

859

Communications and publishing

704

661

Property operating expenses

636

694

Travel and motor vehicle

589

982

Corporate services

571

425

Staff related

369

501

Other goods and services

203

149

Collection maintenance and preservation

178

116

Cost of goods sold1

165

143

Printing and office supplies

47

77

Audit fees

33

37

Total goods and services supplied or rendered

13,317

13,322

Goods supplied

1,777

1,525

Services rendered

11,540

11,797

Total goods and services supplied or rendered

13,317

13,322

Other suppliers

Short term leases

17

575

Workers compensation expenses

96

44

Total other suppliers

113

619

Total supplier expenses

13,430

13,941

AIATSIS holds two short-term lease commitments with a combined value of $0.04 million as at 30 June 2021.

ACCOUNTING POLICY – SUPPLIERS

AIATSIS has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less or leases of low-value assets (less than $0.01 million). AIATSIS recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

2021

2020

$'000

$'000

1.1C: Grants

Not for profit institutions

680

-

Education institutions

487

-

Total grants

1,167

-

1.1D: Finance costs

Interest on lease liabilities

20

8

Total finance costs

20

8

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

1.1E: Write-down and impairment of other assets

Write-off of inventory1

10

11

Write-off of non-financial assets

16

105

Total write-down and impairment of other assets

26

116

1 Reclassification of $0.01 million in 2019-20 from cost of goods sold to write off of inventory.

1.2: OWN-SOURCE REVENUE AND GAINS

2021

2020

$'000

$'000

1.2A: REVENUE FROM CONTRACTS WITH CUSTOMERS

Rendering of services

5,668

5,212

Sale of goods

1,026

625

Total revenue from contracts with customers

6,694

5,837

Disaggregation of revenue from contracts with customers

Major product / service line:

Cultural services

2,504

-

Research services

1,466

3,975

Sale of inventory and subscriptions

1,105

625

Grants

826

804

Conferences

793

433

6,694

5,837

Type of customer1:

Australian Government (related entities)

5,016

4,583

Non-government entities

1,279

1,018

Research institutes

242

193

State and Territory Governments

157

43

6,694

5,837

Timing of transfer of goods and services:

Over time

5,110

4,827

Point in time

1,584

1,010

6,694

5,837

1 Customer type has been expanded in 2020-21 and 2019-20 data has been reclassified.

ACCOUNTING POLICY – REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from the sale of goods is recognised when control has been transferred to the buyer. An agreement is recognised as revenue from contracts with customers when there is an enforceable contract and the performance obligations are sufficiently specific to enable AIATSIS to determine when they have been satisfied.

The following are principal activities from which AIATSIS generates revenue:

- Rendering of services: is revenue generated from research, cultural or other services agreements, and is recognised as performance obligations are satisfied. Performance obligations may vary and can be recognised at a point in time, over time (on a straight line basis) or as expenses are incurred.

- Sale of goods: sales of inventory where revenue is recognised when control has been transferred to the buyer.

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

2021

2020

$'000

$'000

1.2B: GRANTS

From related entities

2,611

1,381

TOTAL GRANTS

2,611

1,381

ACCOUNTING POLICY – GRANT REVENUE

Grants revenue is recognised on receipt, except where there is a performance obligation or liability to be captured as part of the agreement, which will be brought to account over time or when the performance obligation is satisfied.

1.2C: OTHER REVENUE

Donations and sponsorship1

258

4

Other revenue2

46

113

TOTAL OTHER REVENUE

304

117

1 Reclassification of $0.26 million in 2019-20 from donations and sponsorship to donated and found assets.

2 Reclassification of minor amounts in 2019-20 from other revenue to other gains.

1.2D: OTHER GAINS

Gains from changes in employee provisions

163

-

Donated and found assets1

102

258

Other2

67

2

TOTAL OTHER GAINS

332

260

1 Reclassification of $0.26 million in 2019-20 from donations and sponsorship to donated and found assets.

2 Reclassification of minor amounts in 2019-20 from other revenue to other gains.

1.2E: REVENUE FROM GOVERNMENT

Funding received or receivable from non-corporate Commonwealth entities is recognised as Revenue from Government by AIATSIS unless the funding is in the nature of an equity injection, grant, research service or a loan.

2. Financial position

2.1: FINANCIAL ASSETS

2021

2020

$'000

$'000

2.1A: Cash and cash equivalents

Cash on hand or on deposit

1,768

1,680

Total cash and cash equivalents

1,768

1,680

ACCOUNTING POLICY – CASH AND CASH EQUIVALENTS

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

a) cash on hand;

b) demand deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value; and

c) cash in special accounts.

2.1B: TRADE AND OTHER RECEIVABLES

Goods and services receivables

Goods and services

452

313

Total goods and services receivables

452

313

Other receivables

GST receivable from the Australian Taxation Office

288

472

Interest receivable

47

29

Total other receivables

335

501

Total trade and other receivables (gross)

787

814

Less impairment loss allowance

-

(4)

Total trade and other receivables (net)

787

810

Credit terms for goods and services were within 30 days (2020: 30 days)

ACCOUNTING POLICY – TRADE AND OTHER RECEIVABLES

Trade receivables, loans and other receivables that are held for the purpose of collecting contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided below market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

2.2: NON-FINANCIAL ASSETS

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

Buildings1

Heritage and Cultural2

Plant and equipment3

Computer Software

Total

$’000

$’000

$’000

$’000

$’000

As at 1 July 2020

Gross book value

16,390

11,826

3,834

75

32,125

Accumulated depreciation, amortisation

(389)

-

(1,015)

(64)

(1,468)

and impairment

Total as at 1 July 2020

16,001

11,826

2,819

11

30,657

Additions:

Purchase

345

28

807

-

1,180

Donated and found

-

18

84

-

102

Revaluations and impairments recognised in

605

191

48

-

844

other comprehensive income4

Depreciation and amortisation

(420)

-

(861)

(9)

(1,290)

Depreciation on right-of-use assets

(130)

-

-

-

(130)

Assets written off

-

(14)

(2)

-

(16)

Other movements

-

-

1

-

1

Total as at 30 June 2021

16,401

12,049

2,896

2

31,348

Total as at 30 June 2021 represented by:

Gross book value

16,575

12,049

3,180

75

31,879

Accumulated depreciation, amortisation

(174)

-

(284)

(73)

(531)

and impairment

Total as at 30 June 2021

16,401

12,049

2,896

2

31,348

Carrying amount of right-of-use assets

607

-

-

-

607

1 AIATSIS's building may not be disposed of without prior Ministerial approval.

2 Buildings and plant and equipment that met the definition of a heritage and cultural item are disclosed in the heritage and cultural asset class.

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

4 Revaluations were conducted in accordance with the revaluation policy stated at Accounting Policy – Non-Financial Assets. An independent valuer conducted the revaluations as at 30 June 2021.

ACCOUNTING POLICY – NON-FINANCIAL ASSETS

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.

Asset Recognition Threshold

Asset purchases 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).

Desktop and laptop computers, heritage and cultural assets are recognised as assets regardless of cost.

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 Commonwealth lessees as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned.

Lease Right of Use (ROU) Assets - continued

On initial adoption of AASB 16 AIATSIS 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 in Commonwealth agency, General Government Sector (GGS) and Whole of Government financial statements.

Revaluations

Following initial recognition at cost, property, plant and equipment (excluding ROU assets) 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 their 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 reverse a previous revaluation increment for that class. In 2020-21 Jones Lang LaSalle Advisory Services Pty Ltd were engaged to perform a revaluation to determine the fair value from observable market evidence.

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.

Assets are valued on a recurring basis as required by AASB 13 Fair Value Measurement.

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives using 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 assets are as follows:

2021

2020

Buildings

15 to 70 years

15 to 70 years

Buildings – right-of-use

6 years

6 years

Plant and equipment

1 to 20 years

1 to 20 years

Heritage and cultural

50 to 99 years

50 to 99 years

AIATSIS has items of heritage and cultural assets that have unlimited useful lives and are not depreciated.

Impairment

All assets were assessed for impairment at 30 June 2021. Where indications of impairment exist, if the asset’s recoverable amount is less than its carrying amount, the asset’s recoverable amount is estimated and an impairment adjustment made.

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 AIATSIS were deprived of the asset, the recoverable amounts are expected to be materially the same as fair value. All software assets were assessed for indications of impairment as at 30 June 2021.

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.

Heritage and Cultural Assets

AIATSIS collects and preserves heritage and cultural assets. The collection includes moving images, photos, art, artefacts and manuscripts.

AIATSIS has a performance outcome to support the long-term digital preservation of collection assets held in the Collection. AIATSIS digitally preserves items identified on the prioritisation schedule within the Collection in adherence to cultural protocols, intellectual property rights and using internationally recognised standards.

Intangibles

AIATSIS's intangibles comprise internally developed computer software for internal use and purchased computer software. 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. The useful lives of AIATSIS's software are 3 to 5 years.

All software assets were assessed for indications of impairment as at 30 June 2021.

2021

2020

$'000

$'000

2.2B: INVENTORIES

Finished goods

233

236

Less: provision for slow moving and obsolete inventory

(28)

(65)

TOTAL INVENTORIES

205

171

In 2020-21 $0.17 million of inventory held for sale was recognised as an expense (2020: $0.14 million).

ACCOUNTING POLICY - INVENTORIES

Inventories held for sale are valued at the lower of cost and net realisable value.

Finished goods include the cost of direct materials and labour plus attributable costs that can be allocated on a reasonable basis.

2.2C: OTHER NON-FINANCIAL ASSETS

Prepayments

1,069

987

TOTAL OTHER NON-FINANCIAL ASSETS

1,069

987

No indicators of impairment were found for other non-financial assets.

2.3: PAYABLES

2.3A: Suppliers payable

Trade creditors and accruals

1,142

734

Refunds payable

24

-

Total suppliers payable

1,166

734

Refunds payable of $0.02 million at 30 June 2021 relate to Summit conference registrations to be returned due to COVID-19 lockdowns (2020: nil).

2.3B: Other payables

Salaries and wages

220

174

Superannuation

37

29

Unearned income

6,885

8,760

Other

9

-

Total other payables

7,151

8,963

2.4: INTEREST BEARING LIABILITIES

2.4A: Leases

Lease liabilities

624

734

Total leases

624

734

Total cash outflow for leases for the year ended 30 June 2021 was $0.13 million (2020: $0.04 million).

Maturity analysis - contractual undiscounted cash flows

Within 1 year

136

132

Between 1 to 5 years

533

568

More than 5 years

-

101

Total leases

669

801

The above lease disclosures should be read in conjunction with the accompanying notes 1.1D and 2.5A.

AIATSIS in its capacity as lessee has one fixed term lease with a fixed date for expiry. The lease relates to art and artefact storage with the National Archives of Australia with a termination date of 28 February 2026.

ACCOUNTING POLICY – LEASE LIABILITIES

For all new contracts entered into, AIATSIS 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 applicable 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.

2.5 PROVISIONS

2.5A: Other provisions

Provision for restoration

Total

$'000

$'000

As at 1 July 2020

10

10

Additional provisions made

-

-

Amounts used

-

-

Total as at 30 June 2021

10

10

AIATSIS currently has one (2020: one) agreement for the leasing of premises which has a provision requiring AIASTIS to restore the premises to their original condition at the conclusion of the lease. AIATSIS has made a provision to reflect the present value of the obligation.

3. People and relationships

3.1: EMPLOYEE PROVISIONS

2021

2020

$'000

$'000

3.1A: Employee provisions

Annual leave

1,367

1,319

Long service leave

2,546

2,794

Total employee provisions

3,913

4,113

ACCOUNTING POLICY – EMPLOYEE PROVISIONS

Employee related expenses are recognised in the period that employee services are received.

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.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

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 AIATSIS’s 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 the short hand method as at 30 June 2021. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation. During 2020-21 Cumpston Sarjent Actuaries were engaged to undertake a review of the employee provision methodology to ensure compliance with AASB 119 Employee Benefits. The interest rates used in discounting future cash flows relate to government bond rates with a comparable term to the leave obligations.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. AIATSIS 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

AIATSIS's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap), or other superannuation funds held outside the Australian Government.

CSS and PSS are defined benefit schemes for the Australian Government. 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.

AIATSIS 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 Government. AIATSIS accounts for the contributions as if they were contributions to defined contribution plans.

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

3.2: KEY MANAGEMENT PERSONNEL REMUNERATION

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of AIATSIS, directly or indirectly, including any director of AIATSIS. AIATSIS has determined the key management personnel to be Council Members, the Chief Executive Officer, the Deputy Chief Executive Officer, and Executive Directors. Key management personnel remuneration is reported in the table below:

2021

2020

$'000

$'000

3.2A: Key management personnel remuneration

Short-term employee benefits

1,191

1,131

Post-employment benefits

170

158

Other long-term employee benefits

52

44

Total key management personnel remuneration expenses1

1,413

1,333

The total number of key management personnel that are included in the above table are 15
(2020: 18).

1 While the Portfolio Minister is not a key management personnel, we note the Portfolio Minister’s remuneration and other benefits are set by the Remuneration Tribunal and are not paid by AIATSIS.

3.3: RELATED PARTY DISCLOSURES

Related party relationships:

AIATSIS is an Australian Government controlled entity, whose related parties are key management personnel, the Portfolio Minister 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 and services;
  • asset purchases, sales transfers or leases;
  • debts forgiven; and
  • guarantees.

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

4. OTHER INFORMATION

4.1: Financial Instruments

2021

2020

$'000

$'000

4.1A: Categories of financial instruments

Financial assets at amortised cost

Cash on hand or on deposit

1,768

1,680

Investments

22,402

24,503

Goods and services receivable

452

309

Interest receivable

47

29

Total financial assets at amortised cost

24,669

26,521

Financial liabilities measured at amortised cost

Trade creditors and accruals

1,142

734

Refunds payable

24

-

Total financial liabilities measured at amortised cost

1,166

734

4.1B: Net gains or losses on financial assets

Financial assets at amortised cost

Interest revenue

204

435

Net gains on financial assets at amortised cost

204

435

4. OTHER INFORMATION

ACCOUNTING POLICY – FINANCIAL INSTRUMENTS

Financial assets

Financial assets are recognised when the entity becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash. Financial assets are derecognised when the contractual rights to the cash flows expire or are transferred upon trade date. They are classified and measured at amortised cost determined using the effective interest method. The collectability of debts are reviewed at the end of the reporting period and an impairment allowance is recognised.

Financial liabilities

Financial liabilities, including trade and other payables accruals are classified as financial liabilities which are recognised and derecognised upon ‘trade date’. Financial liabilities are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method. Liabilities are recognised to the extent that goods or services have been received (and irrespective of having been invoiced).

Settlement is usually made within 30 days or as per terms in the contractual arrangements.

4.2: Current/Non-current Distinction for Assets and Liabilities

2021

2020¹

$'000

$'000

4.2A: Current/non-current distinction for assets and liabilities

Assets expected to be recovered in:

No more than 12 months

Cash and cash equivalents

1,768

1,680

Investments

22,402

24,503

Trade and other receivables

787

810

Other non-financial assets

899

987

Inventories

205

171

Total no more than 12 months

26,061

28,151

More than 12 months

Other non-financial assets

170

-

Buildings

16,401

16,001

Heritage and cultural

12,049

11,826

Plant and equipment

2,896

2,819

Computer software

2

11

Total more than 12 months

31,518

30,657

Total assets

57,579

58,808

Liabilities expected to be settled in:

No more than 12 months

Suppliers payable

1,166

734

Other payables

7,151

6,721

Leases

119

111

Employee provisions

1,596

1,542

Total no more than 12 months

10,032

9,108

More than 12 months

Other payables

-

2,242

Leases

505

623

Employee provisions

2,317

2,571

Other provisions

10

10

Total more than 12 months

2,832

5,446

Total liabilities

12,864

14,554

1 Discrepancies between totals stated above and amounts published in the 2019-20 annual report are rounding and have occurred due to disaggregation of balances under new disclosure requirements.

4.3: BUDGETARY REPORTING

Statement of Comprehensive Income

In 2020-21 AIATSIS reported an operating deficit of $0.46 million. This $0.46 million variance represents 2 per cent of the $19.44 million budgeted net cost of services reported in the 2020-21 Portfolio Budget Statements.

AIATSIS’s total expenses of $30.04 million varies by 9 per cent to the original budget. In 2020-21 the estimated budget included all the Indigenous Research Exchange grant funding, as at 30 June 2021 the second round of grant funding had been awarded.

AIATSIS's own source revenue totalled $9.81 million in 2020-21 which varies by 28 per cent to the original budget. The main cause of the variation relates to the delay in the recognition of Indigenous Research Exchange grant funding milestones as outlined above. In addition revenue has been impacted by a decrease in interest revenue and other revenue due to economic impacts of COVID 19.

Statement of Financial Position

As at 30 June 2021, AIATSIS's total equity was $44.72 million compared to the original budget of $44.33 million. The $0.39 million minor variance relates to the 2020-21 deficit on continuing operations ($0.46 million) and movement in asset revaluations ($0.84 million).

Total assets are 2 per cent lower than budget as at 30 June 2021, primarily due to a reduced year-end investment balance related to grant payments made under Indigenous Research Exchange. In addition, lower plant and equipment and heritage and cultural asset balances as a result of reduced asset additions to amounts originally estimated in the budget.

Total liabilities are lower than budget by 11 per cent. The major movements were due to lower than budgeted year-end unearned revenue balance and employee provisions offset by a higher than budgeted supplier payable at 30 June 2021.

Cash Flow Statement

The variances between budget and actuals in the cash flow statement reflect the effects of the events already described.