Statement of comprehensive income

Statement of financial position

Statement of changes in equity

Cash flow statement

Notes to and forming part of the financial statements

Overview

Objectives of the Australian Institute of Criminology
The Australian Institute of Criminology (AIC) is an Australian Government controlled entity. The objective of the AIC is to inform crime and justice policy and practice in Australia by undertaking, funding and disseminating policy relevant research of national significance; and through the generation of a crime and justice evidence base and national knowledge centre.

The continued existence of the AIC in its present form is dependent on Government policy and on continuing funding by Parliament. The AIC’s activities contributing toward this outcome are classified as departmental. Departmental activities involve the use of assets and income controlled, or liabilities and expenses incurred by the AIC in its own right.

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 and notes have been prepared in accordance with:
a) Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
b) Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board 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 which are carried 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 dollar.

Unless an alternative treatment is specifically required by an accounting standard or the FRR, assets and liabilities are recognised in the statement of financial position when and only when it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under executory contracts are not recognised unless required by an accounting standard.

Unless an alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the statement of comprehensive income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

Taxation
The AIC is exempt from all forms of taxation except fringe benefits tax (FBT) and the goods and services tax (GST).

Revenues, expenses and assets are recognised net of GST except:
a) where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
b) for receivables and payables.

Comparative Figures
Comparative figures for 2017–18 reflect the figures reported in the AIC’s 2017–18 financial statements.

Comparative figures have been adjusted to conform with changes in presentation to these financial statements where required.

Contingent assets and liabilities
The AIC did not have any quantifiable contingencies to report for the financial year ended 30 June 2019 (2017–18: Nil).

Events after the reporting period
No subsequent events to report after the balance date.

Note 1.1: Expenses

AIC staff were primarily employed by ACIC for the duration of the year and seconded to the AIC to resource AIC’s ongoing operations. The ACIC initially met all the employee expenses, and claimed reimbursement from the AIC on a monthly basis. Therefore, whilst the employee benefits costs are reflected in the AIC statement of comprehensive income, the AIC does not hold any liabilities or provision in respect to employees in the statement of financial position.

Accounting Policy

Superannuation

The ACIC staff seconded to AIC were 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 PSSap is a defined contribution scheme. The CSS and PSS are defined benefit schemes for the Australian Government. The liability for defined benefit schemes is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance as an administered item.

The ACIC makes employer contributions to the employees' defined benefit superannuation schemes in respect to the staff seconded to AIC at rates determined by an actuary to be sufficient to meet the current cost to the Government. The ACIC and AIC accounts for the contributions as if they were contributions to defined contribution plans.

Accounting Policy

Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the leased asset. The AIC leased office space in Griffith until December 2017.

Note 1.2: Own source revenue

Accounting Policy

Rendering of Services

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

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

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

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

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

Accounting Policy

Resources Received Free of Charge

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

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 AIC 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.

Note 2.1: Financial assets

Accounting Policy

Trade and Other Receivables

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

Note 2.2: Non-financial assets

Revaluations of non-financial assets

All revaluations were conducted in accordance with the revaluation policy stated in note 2.2A. The last full valuation was carried out in 2017-18.

Accounting Policy

Asset Recognition

Furniture and office equipment costing greater than $5,000, leasehold improvements costing greater than $25,000, intangible assets purchased externally costing greater than $5,000 and intangible assets purchased and modified or developed internally costing greater than $20,000 are capitalised. All library items are accumulated as a single asset on a financial year basis and recognised irrespective of the value. Items costing less than these thresholds are expensed in the year of acquisition.

Revaluations

Following initial recognition at cost, furniture and office equipment are carried at fair value. Carrying values of the assets are reviewed every third year to determine if an independent valuation is required. The regularity of independent valuations depends on the volatility of movements in the market values for the relevant assets. Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that is previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse a previous revaluation increment for that class. Upon revaluation, any accumulated depreciation is eliminated against the gross carrying amount of the asset.

Depreciation

Depreciable furniture and office equipment assets are written-off to their estimated residual values over their estimated useful life using the straight-line method of depreciation. Leasehold improvements are depreciated over the life of the lease term. Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Depreciation rates applying to each class of depreciable asset are based on the following expected useful lives, unless an individual asset is assessed as having a different useful life.

Intangibles

Intangibles assets comprise internally developed software and externally purchased software. These assets are carried at cost less accumulated amortisation and accumulated impairment losses. Software licences with the renewable term ending beyond 30 June 2019 are treated as prepayments at the time of purchase and expensed over the term of the prepayment.

Impairment

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

Derecognition

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

Significant Accounting Judgements and Estimates

In the process of applying the accounting policies listed in this note, the AIC has made assumptions or estimates in measuring the fair value of the assets that have the most significant impact on the amounts recorded in the financial statements. The fair value of the AIC’s furniture and office equipment has been taken to be the market value or current replacement costs as determined by an independent valuer.

Note 2.3: Payables

Accounting Policy

Financial Liabilities

Supplier and other payables are classified as ‘other financial liabilities’ and 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). Supplier and other payables are derecognised on payment.

Note 2.4: Special accounts

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

The Criminology Research Special Account is established under Section 46 of the Criminology Research Act 1971 as amended through the Financial Framework Legislative Amendment Act 2010 with effect from 1 July 2011.

Purpose: Conduct criminology research to promote justice, crime reduction and communicating results to Commonwealth, State & Territory, including administering programs to award grants, engage specialists for research and publication of that research.

Note 3.1: Appropriations

Unspent Annual Appropriations (‘Recoverable GST excusive’)

The AIC has no undrawn and unspent ordinary annual appropriation as at 30 June 2019 (2017-18: nil).

The AIC has no undrawn and unspent ordinary annual appropriation as at 30 June 2019, and has also drawn $18,000 Capital Budgets not drawn as at 30 June 2018.

Note 4.1: Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity. The AIC has determined the key management personnel positions to be the Director and the Deputy Director1. The key management personnel remuneration excludes the remuneration and other benefits of the Minister. The Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the AIC. Key management personnel remuneration (excluding the Director: refer note below) is reported in the table below:

Note 4.2: Related party disclosure

Related party relationships:

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

Transactions with related parties:

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

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

Note 5.1: Financial instruments

Changes with the implementation of AASB 9

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

Based on the receivable management history and the current debt management process, the AIC assessed its risk of impairment is nil or immaterial. Hence, nil impairment is reported in the financial assets.

Note 6.1 : Aggregate assets and liabilities

Note 7: Budgetary variance reporting

The following are explanations of events that have impacted on the AIC’s operations and activities for the year. Budget numbers are sourced from the AIC’s PBS for 2018-19 and are provided in the primary statements. Budgeted numbers are not audited.

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

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