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Notes to and forming part of financial statements

Note 1: Overview and summary of significant accounting policies

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:

  1. Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); 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 dollar unless otherwise specified.

Unless 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.

Significant accounting judgements and estimates

Refer to Note 15 for explanation of assumptions used in estimating the fair value of assets.

The liability for long service leave has been estimated using present value techniques in accordance with the short hand method in accordance with section 24 of the FRR. This takes into account expected salary growth, attrition and future discounting using Commonwealth bond rates.

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

New Australian Accounting Standards

Adoption of New Australian Accounting Standard Requirements

New standards, amendments to standards and interpretations that were issued by the Australian Accounting Standards Board (AASB) prior to the signoff date and are applicable to future reporting periods are not expected to have a future material impact on the Institute's financial statements.

The standards that were issued prior to the sign‑off date and adopted for the first time in the current reporting period are:

AASB 15 Revenue from Contracts with Customers, ASSB 16-8 and AASB 1058 became effective on 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. 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.

Under the new income recognition model the Entity shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), the Entity applies the general AASB 15 principles to determine the appropriate revenue recognition.

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.

The Entity adopted AASB 15 and AASB 1058 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 the various applicable AASBs and related interpretations.

The details of the changes in accounting policies are detailed in the relevant notes to the financial statements.

The initial adoption of these standards had no financial impact.

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

The Entity 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.

The Entity 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. The Entity applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

  • Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
  • 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, the Entity 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, the Entity recognises right-of-use assets and lease liabilities for most leases. However, the Entity 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, the Entity recognised right-of-use assets and lease liabilities in relation to leases of office space, which had previously been classified as operating leases.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Entity’s incremental borrowing rate as at 1 July 2019. The Entity’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 2.06%.

Impact on transition

On transition to AASB 16, the Entity recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below:

Departmental

1 July 2019

Right-of-use assets – property, plant and equipment

$4,844,000

Lease liabilities

$4,844,000

Lease incentive – fit out

$530,000

Retained earnings

$530,000

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

$7,132,731

Less: outgoings

$1,865,174

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

$423,557

Lease liabilities recognised at 1 July 2019

$4,844,000

Taxation

The Institute 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:

  1. where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
  2. for receivables and payables.

Note 2: Events after the reporting period

The Director and Accountable Authority has provided notice of resignation.

Note 3: Expenses

Note 3A: Employee benefits

2020 $

2019 $

Salaries and wages

7,419,932

6,969,087

Superannuation

Defined contribution plans

1,110,662

961,865

Defined benefit plans

267,977

469,403

Leave and other entitlements

1,309,150

1,323,112

Other employee benefits

132,543

100,172

Total employee benefits

10,240,264

9,823,638

Note 3B: Suppliers

2020 $

2019 $

Goods and services supplied or rendered

Consultants

2,513,460

1,265,564

Contractors

1,449,992

1,320,483

Travel

266,784

357,328

IT Services

356,838

253,036

Total goods and services supplied or rendered

4,587,074

3,196,411

Goods supplied

48,580

72,345

Services rendered

4,538,494

3,124,066

Total goods supplied

4,587,074

3,196,411

Other suppliers

Operating lease rentals1

637,798

Workers compensation expenses

147,783

383,899

Total other suppliers

147,783

1,021,697

Total suppliers

4,734,857

4,218,110

Note:

  1. The Entity has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Note 3C: Finance costs

2020 $

2019 $

Interest on lease liabilities

89,000

Unwinding of discount or change in discount rate

19,405

3,628

Total finance costs

108,405

3,628

The above lease disclosures should be read in conjunction with the accompanying notes 1.3 and 6A.

Accounting policy: employee benefits

Superannuation

The majority of the staff of the Institute are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) or the PSS accumulation plan (PSSap).

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 and Deregulations administered schedules and notes.

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

The liability for superannuation recognised as at 30 June each year represents pro-rata outstanding contributions for the final fortnight of the year.

Refer also to Note 8: Employee provisions for accounting policy with respect to leave provisions.

Accounting Policy: Short-term leases and leases of low-value assets

The Institute 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 entity recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The Institute has no such leases.

Note 4: Own-source income

Own-source revenue

Note 4A: Revenue from contracts with customers

2020 $

2019 $

Sale of goods

11

24,567

Revenue from contracts with customers

9,984,700

9,577,152

Total revenue from contracts with customers

9,984,711

9,601,719

Own sourced income for AIFS is derived from research activities recognised over time.

Type of customer:

Australian Government entities (related parties)

8,956,747

7,446,884

State and Territory Governments

723,616

1,096,158

Non-government entities

304,348

1,058,677

Total type of customer

9,984,711

9,601,719

Note 4B: Other revenue

2020 $

2019 $

Cost recovery

916

11,113

ANAO audit services received free of charge

33,000

33,000

Total other revenue

33,916

44,113

Note 4C: Revenue from Government

2020 $

2019 $

Departmental appropriations

4,452,000

4,412,000

Total revenue from Government

4,452,000

4,412,000

Accounting Policy: Revenue

Revenue from contracts with customers

The Institute receives contract revenue by conducting high-quality research relevant to policy and practice on a broad range of issues regarding families in Australia for various stakeholders. The key stakeholders comprise mainly other Commonwealth agencies, State Government agencies as well as non-government entities.

Revenue from rendering of contract services is recognised by reference to the stage of completion of contracts over time and is measured at the reporting date. AIFS Revenue policies relating to when a contract is in scope of AASB 15 and if the performance obligations are required by an enforceable contract and they are sufficiently specific to enable the Entity to determine when they have been satisfied.

The stage of completion of contracts at the reporting date is determined by reference to either:

  1. services performed to date as a percentage of total services to be performed; or
  2. the proportion that costs incurred to date bear to the estimated total costs of the transaction; or)milestones achieved against provision in the contract.

Copyright royalty revenue for the use of the Institute’s publications and bibliographic databases is recognised on an accrual basis. The Institute has no control over the amount of royalties and a provisional amount is accrued based on historical receipts.

Cost recovery which relates mainly to Comcare receipts and sponsorships of travel expenses is recognised on an accrual basis.

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.

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 Institute 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.

Resources received free of charge

Resources received free of charge are recognised as gains 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.

Accounting Policy: Gains

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements. The Institute did not receive any contribution of assets in 2019/20 or 2018/19.

Sale of assets

Gains from disposal of assets are recognised when control of the asset has passed to the buyer.

Note 5: Financial assets

Note 5A: Cash and cash equivalents

2020 $

2019 $

Cash on hand or on deposit

1,359,941

1,660,720

Total cash and cash equivalents

1,359,941

1,660,720

Note 5B: Trade and other receivables

2020 $

2019 $

Goods and services receivables in connection with

Goods and services

504,947

1,813,868

Other receivables

21,141

26,481

Total goods and services receivables

526,088

1,840,349

Appropriation receivable

Appropriation receivable (existing programs)

6,607,307

6,694,386

Total trade and other receivables

7,133,395

8,534,735

Note: No indicators of impairment were found for receivables.

Accounting Policy: Cash

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

  1. cash on hand; and
  2. 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.

Note 6: Non-financial assets

Leasehold improvements $

Plant and equipment $

Computer software $

Total $

As at 1 July 2019

Gross book value

1,863,367

880,080

42,000

2,785,447

Accumulated depreciation and impairment

(28,800)

(28,800)

Total as at 1 July 2019

1,834,567

880,080

42,000

2,756,647

Recognition of right of use asset on initial application of AASB 16

4,844,000

4,844,00

Adjusted Total as at 1 July 2019

6,678,567

880,080

42,000

7,600,647

Additions

Purchase

17,128

59,929

77,057

Purchase – ICT equipment/WIP

54,559

54,559

Provision for make good

Depreciation and amortisation

(204,507)

(153,829)

(14,000)

(372,336)

Depreciation and amortisation on right‑of‑use assets

(548,594)

(548,594)

Transfer

(1,160)

1,160

Other movements

Accumulated depreciation on disposals

581

581

Disposals

(4,980)

(4,980)

Total as at 30 June 2020

5,937,035

841,899

28,000

6,806,934

Total as at 30 June 2020 represented by

Gross book value

6,690,136

995,728

42,000

7,727,864

Accumulated depreciation and impairment

(753,101)

(153,829)

(14,000)

(920,930)

Total as at 30 June 2020

5,937,035

841,899

28,000

6,806,934

Carrying amount of right-of-use assets

4,295,406

4,295,406

Note 6A: Reconciliation of the opening and closing balances of leasehold improvements, plant and equipment and intangibles

Reconciliation of the opening and closing balances of leasehold improvements, plant and equipment and intangibles for 2020

Accounting Policy: Acquisition of 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.

Accounting Policy: Leasehold improvements, plant and equipment

Asset recognition threshold

Purchases of leasehold improvements, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $1,000 and for leasehold improvements and computer software for purchases costing less than $10,000 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 ‘make good’ provisions in property leases taken up by AIFS where there exists an obligation to restore property to its original condition. These costs are included in the value of leasehold improvements with a corresponding provision for 'make good' recognised.

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 lease less any lease incentives received. These assets are accounted for by the 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.

On initial adoption of AASB 16 the entity 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 in Commonwealth agency, GGS and Whole of Government financial statements.

Revaluations

Fair values for each class of asset are determined as shown below:

Asset class

Fair value measurement

Leasehold improvements

Depreciated replacement cost

Plant and equipment

Market selling price

Following initial recognition at cost, leasehold improvements, plant and equipment (excluding ROU assets) were carried at fair value. Valuations were conducted with sufficient frequency to ensure that the carrying amounts of assets do 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 was 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 leasehold improvements, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Institute using, 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:

2020

2019

Leasehold improvements

10 years

10 years

Plant and equipment

3 to 15 years

3 to 15 years

Impairment

All assets were assessed for impairment at 30 June 2020. As no indicators of impairment were identified. It was determined that there was no impairment.

The recoverable amount of an asset is the higher of its fair value less costs to sell 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 Institute were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

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

Accounting Policy: Intangibles

The Institute’s intangibles comprise commercially purchased software and are recognised initially at cost in the statement of financial position, except for purchases costing less than $10,000 which are expensed on acquisition. Intangibles 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 the Institute’s software are 3 to 5 years (2018/19: 3 to 5 years).

All software assets were assessed for indications of impairment as at 30 June 2020.

Note 6B: Prepayments

2020 $

2019 $

Prepayments

351,619

299,493

Total other non-financial assets

351,619

299,493

Note: No indicators of impairment were found for prepayments.

Note 7: Payables

Note 7A: Unearned income

2020 $

2019 $

Unearned income advanced

6,080,933

7,327,257

Total unearned income

6,080,933

7,327,257

Note 7B: Suppliers

2020 $

2019 $

Suppliers in connection with

Trade creditors and accruals

573,746

207,069

Total suppliers

573,746

207,069

Suppliers are expected to be settled in no more than 12 months. Settlement was usually made within 30 days.

Note 7C: Other payables

2020 $

2019 $

Salaries and wages

129,321

70,544

Superannuation

20,629

10,732

Lease incentive1

530,000

GST payable

194,319

267,577

Other

3,160

(1,549)

Total other payables

347,427

877,304

Note:

  1. The Entity has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

2020 $

2019 $

Other payables to be settled

No more than 12 months

347,427

407,304

More than 12 months

470,000

Total other payables

347,427

877,304

Note 7D: Interest bearing liability

2020 $

2019 $

Leases1

4,427,000

Total interest bearing liability

4,427,000

Note:

  1. The Entity has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Total cash outflow for leases for the year ended 30 June 2020 was $509,715.

Accounting Policy: Financial liabilities

Unearned income are commissioned research revenue payments received but cannot be recognised as revenue because the tasks or deliverables are not completed at the time payments were received.

The Institute classifies its financial liabilities as ‘other financial liabilities’. This comprises suppliers and other payables that 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).

Financial liabilities are recognised and derecognised upon ‘trade date’.

Note 8: Employee provisions

Note 8A: Employee provisions

2020 $

2019 $

Leave

2,367,474

2,234,732

Total employee provisions

2,367,474

2,234,732

Employee leave provisions expected to be settled

No more than 12 months

733,417

726,804

More than 12 months

1,634,057

1,507,928

Total employee provisions

2,367,474

2,234,732

No liability existed for separation and redundancy in 2020.

Note 8B: Other provisions

2020 $

2019 $

Provision for make good

As at 1 July 2019

350,295

240,000

Additional provision made

106,667

Unwinding of discount or change in discount rate

19,405

3,628

Total other provisions

369,700

350,295

The Institute currently has an agreement for leasing of premises which has provisions requiring the Institute to restore the premises to their original condition at the conclusion of the lease. The Institute has made a provision to reflect present value of this obligation.

Accounting Policy: Employee provisions

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the end of reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

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. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Institute is estimated to be less than the annual entitlement for sick 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 the Institute’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 the use of the Department of Finance’s shorthand method using the Standard Commonwealth sector probability profile. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Note 9: Appropriations

Note 9A: Annual appropriations (‘recoverable GST exclusive’)

Annual appropriations for 2020

Annual appropriation1 $

Adjustments to appropriation2 $

Total appropriation $

Appropriation applied in 2020 (current and prior years) $

Variance3 $

Departmental

Ordinary annual services

4,452,000

11,456,220

15,908,220

16,152,322

(244,102)

Capital budget4

189,000

189,000

31,978

157,022

Equity injections

Total departmental

4,641,000

11,456,220

16,097,220

16,184,300

(87,080)

Notes:

  1. In 2019/20, there were no appropriations which have been withheld (Section 51 of PGPA Act) and quarantined for administration purposes.
  2. In 2019/20, adjustments to appropriation were mostly PGPA Act Section 74 receipts.
  3. The variance is attributable to the change in the balance of unspent Annual Appropriation between 30 June 2019 and 30 June 2020 (see note 9B). This is due to delays in revenue being recognised on contracted research and timing of capital expenditure.
  4. Departmental Capital Budgets are appropriated through Appropriation Acts (No. 1, 3, 5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.

Annual appropriations for 2019

Annual appropriation1 $

Adjustments to appropriation2 $

Total appropriation $

Appropriation applied in 2019 (current and prior years) $

Variance3 $

Departmental

Ordinary annual services

4,412,000

12,566,560

16,978,560

15,125,709

1,852,851

Capital budget4

189,000

189,000

425,792

(236,792)

Equity injections

Total departmental

4,601,000

12,566,560

17,167,560

15,551,501

1,616,059

Notes:

  1. In 2018/19, there were no appropriations which have been withheld (Section 51 of PGPA Act) and quarantined for administration purposes.
  2. In 2018/19, adjustments to appropriation were mostly PGPA Act Section 74 receipts.
  3. The variance is attributable to the change in the balance of Unspent Annual Appropriation between 30 June 2018 and 30 June 2019 (see note 9B).
  4. Departmental Capital Budgets are appropriated through Appropriation Acts (No.1,3,5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.

Note 9B: Unspent annual appropriations (‘recoverable GST exclusive’)

2020 $

2019 $

Departmental

Appropriation Act 1 2018/19

6,694,386

Appropriation Act 1 2018/19 cash at bank

1,660,720

Appropriation Act 1 2019/20

6,607,307

Appropriation Act 1 2019/20 cash at bank

1,359,941

Total departmental

7,967,248

Accounting Policy: Transactions with the Government as owner

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.

Other distributions to owners

The FRR require that distributions to owners be debited to contributed equity unless in the nature of a dividend. There was no distribution to owners in 2019/20 or 2018/19.

Note 10: Net cash appropriation arrangements

2020 $

2019 $

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

(984,399)

125,359

Plus: depreciation right-of-use assets

(548,594)

Plus: depreciation/amortisation expenses previously funded through revenue appropriations

(372,336)

(448,535)

Less: Principal repayment – leased assets

417,000

Total comprehensive income (loss) – as per Statement of Comprehensive Income

(1,488,329)

(323,176)

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.

The inclusion of depreciation/amortisation expenses related to ROU leased assets and the lease liability principle repayment amount reflects the cash impact on implementation of AASB 16 Leases, it does not directly reflect a change in appropriation arrangements.

Note 11: Key Management Personnel remuneration

During the reporting period ended 30 June 2020, the Institute had three executives who meet
the definition of Key Management Personnel (KMP). KMP are those persons having authority and
responsibility for planning, directing and controlling the activities of AIFS directly or indirectly. AIFS
determined the KMP to be the Director, Deputy Director Corporate, and Deputy Director Research. Their names and length of terms as KMP are summarised below:

Name

Position

Term as KMP

Anne Hollonds1

Director

Full year

Michael Alexander

Deputy Director

Full year

Kelly Hand

Deputy Director

Full year

Note: 1. The Director and Accountable Authority has provided notice of resignation.

2020 $

2019 $

Short-term employee benefits

Salary

683,548

671,059

Other benefits and allowances

59,266

40,534

Post-employment benefits

Superannuation

112,710

105,559

Other long-term employee benefits

Long service leave

19,602

18,987

Total Key Management Personnel remuneration expenses

875,126

836,139

KMP remuneration was prepared on an accrual basis. The total number of KMP that are included in the above table is three (2019: Three).

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 Institute.

Note 12: Related party disclosures

Related party relationships

The Institute is an Australian Government controlled entity. Related parties of the Institute include but are not limited to:

Related parties to the Institute also included the Portfolio Minister, Cabinet Ministers and other Australian Government entities.

Transaction with related parties

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. 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 to be separately disclosed.

Note 13: Contingent assets and liabilities

The Institute had no quantifiable or unquantifiable contingent assets or liabilities as at 30 June 2020 (2019: nil).

Note 14: Financial instruments

Note 14A: Categories of financial instruments

2020 $

2019$

Financial Assets under AASB 139

Cash on hand or on deposit

1,359,941

1,660,720

Goods and services

504,947

1,813,868

Other receivables

21,141

26,481

Total financial assets at amortised cost

1,886,030

3,501,069

Total financial assets

1,886,030

3,501,069

The net fair values of cash and cash equivalents and trade receivables approximates their carrying amounts.

2020 $

2019 $

Financial liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

573,746

207,069

Total financial liabilities measured at amortised cost

573,746

207,069

Total financial liabilities

573,746

207,069

The net fair value of trade creditors and accruals approximates their carrying amounts.

Accounting Policy: 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:

  1. financial assets at fair value through profit or loss;
  2. financial assets at fair value through other comprehensive income; and
  3. 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 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.

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.

Financial Assets at Fair Value Through Other Comprehensive Income (FVOCI)

Financial assets measured at fair value through other comprehensive income are held with the objective of both collecting contractual cash flows and selling the financial assets and the cash flows meet the SPPI test.

Any gains or losses as a result of fair value measurement or the recognition of an impairment loss allowance is recognised in other comprehensive income.

Financial Assets at Fair Value Through Profit or Loss (FVTPL)

Financial assets are classified as financial assets at fair value through profit or loss where the financial asset either doesn't meet the criteria of financial assets held at amortised cost or at FVOCI (i.e. mandatorily held at FVTPL) or may be designated.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

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.

Accounting Policy: Financial liabilities

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 liability.

Financial liabilities at amortised cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

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).

Note 14B: Net gain or losses on financial assets/financial liabilities

There was no gain or losses from financial assets – loans and receivables – at amortised cost in the financial year ended 30 June 2020 (2019: nil).

Accounting Policy: Financial liabilities and financial assets

Financial liabilities and financial assets that are not contractual (such as GST, created as a result of statutory requirements imposed by governments) are not financial instruments.

Receivables

Receivables consist of contractual receivables, such as accounts payable and accruals.

Payables

Payables consist of contractual payables, such as accounts payable and accruals.

Note 15: Fair value measurements

The following tables provide an analysis of assets and liabilities 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 entity 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.

Accounting Policy

The Institute engaged the service of the Jones Lang Lasalle (JLL) to conduct a detailed external valuation of all non-financial assets at 30 June 2019 and has relied upon those outcomes to establish carrying amounts. An annual assessment is undertaken to determine whether the carrying amount of the assets is materially different from the fair value. Comprehensive valuations carried out at least once every three years. JLL has provided written assurance to the AIFS that the models developed are in compliance with AASB 13.

The methods utilised to determine and substantiate the unobservable inputs are derived and evaluated as follows:

Physical Depreciation and Obsolescence – assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured utilising the Depreciated Replacement Cost approach. Under the Depreciated Replacement Cost approach the estimated cost to replace the asset is calculated and then adjusted to take in physical depreciation and obsolescence. Physical depreciation and obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration. For all Leasehold Improvement assets, the consumed economic benefit/asset obsolescence deduction is determined based on the term of the associated lease.

AIFS' policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

Fair value measurement

Fair value measurements at the end of the reporting period

2020 $

2019 $

Valuation technique(s) and inputs used

Non-financial assets2

Plant and equipment1

Market Approach: This approach seeks to estimate the current value of an asset with reference to recent market transactions involving identical or comparable assets

Inputs: Prices and other relevant information generated by market transactions involving plant and equipment assets were considered.

Plant and equipment1

841,899

880,080

Depreciated replacement cost: The amount a market participant would be prepared to pay to acquire or construct a substitute asset of comparable utility, adjusted for physical depreciation and obsolescence.

Inputs: Current prices for substitute assets. Physical depreciation and obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the assets under consideration.

Leasehold improvements1

1,641,629

1,834,567

Depreciated replacement cost: The amount a market participant would be prepared to pay to acquire or construct a substitute asset of comparable utility, adjusted for physical depreciation and obsolescence.

Inputs: Current costs per square metre of floor area relevant to the location of the asset. Physical depreciation and obsolescence has been determined based on the term of the associated lease.

Total non-financial assets

2,483,528

2,714,647

Notes:

  1. No non-financial assets were measured at fair value on a non-recurring basis as at 30 June 2020 (2019: nil).
  2. AIFS’ assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all non-financial assets is considered their highest and best use.
  3. There were no transfers between Levels 1 and 2 for recurring fair value measurements during the year.

Note 16: Aggregate assets and liabilities

2020 $

2019 $

Assets expected to be recovered in:

No more than 12 months

9,765,886

10,943,483

More than 12 months

5,886,003

2,308,112

Total assets

15,651,889

13,251,595

Liabilities expected to be settled in:

No more than 12 months

9,554,398

8,707,354

More than 12 months

4,611,882

2,289,304

Total liabilities

14,166,280

10,996,658