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Financial statements

STATEMENT BY THE ACCOUNTABLE AUTHORITY AND CHIEF FINANCIAL OFFICER

In our opinion, the attached financial statements for the year ended 30 June 2020 comply with subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.

In our opinion, at the date of this statement, there are reasonable grounds to believe that the corporate Commonwealth entity will be able to pay its debts as and when they fall due.

This statement is made in accordance with a resolution of the directors.

signatures of Louise Markus, Board Chair, Barry Sandison, CEO and Andrew Kettle, Chief Financial Officer. Statement was signed on 24 September 2020

Auditor-General's report

INDEPENDENT AUDITOR’S REPORT

To the Minister for Health

Opinion

In my opinion, the financial statements of the Australian Institute of Health and Welfare (the Entity) for the year ended 30 June 2020:

(a) comply with Australian Accounting Standards – Reduced Disclosure Requirements and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of the Entity as at 30 June 2020 and its financial performance and cash flows for the year then ended.

The financial statements of the Entity, which I have audited, comprise the following as at 30 June 2020 and for the year then ended:

  • Statement by the Accountable Authority and Chief Financial Officer;
  • Statement of Comprehensive Income;
  • Statement of Financial Position;
  • Statement of Changes in Equity;
  • Cash Flow Statement; and
  • Notes to the financial statements, comprising a summary of significant accounting policies and other explanatory information.

Basis for opinion

I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Entity in accordance with the relevant ethical requirements for financial statement audits conducted by the Auditor-General and his delegates. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) to the extent that they are not in conflict with the Auditor-General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Accountable Authority’s responsibility for the financial statements

As the Accountable Authority of the Entity, the Board is responsible under the Public Governance, Performance and Accountability Act 2013 (the Act) for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards – Reduced Disclosure Requirements and the rules made under the Act. The Board is also responsible for such internal control as the Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board is responsible for assessing the ability of the Entity to continue as a going concern, taking into account whether the Entity’s operations will cease as a result of an administrative restructure or for any other reason. The Board is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the assessment indicates that it is not appropriate.

Auditor’s responsibilities for the audit of the financial statements

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian National Audit Office Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

  • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
  • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control;   evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority;
  • conclude on the appropriateness of the Accountable Authority’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern; and
  • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Accountable Authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Australian National Audit Office

Colin Bienke
Audit Principal
Delegate of the Auditor-General
Canberra
24 September 2020

Statement of comprehensive income

Statement of Comprehensive Income

for the period ended 30 June 2020

2020

2019

Original Budget

Notes

$'000

$'000

$'000

NET COST OF SERVICES

Expenses

Employee benefits

1.1A

45,052

42,186

39,585

Suppliers

1.1B

35,783

34,882

33,090

Depreciation and amortisation

2.2A

5,587

1,123

1,400

Finance costs

1.1C

280

-

-

Losses from asset sales

142

-

-

Revaluation decrement

792

-

-

Total expenses

87,636

78,191

74,075

Own-Source Income

Own-source revenue

Revenue from contracts with customers

1.2A

50,321

42,669

37,000

Interest

1.2B

1,332

1,961

1,600

Other revenue

-

-

30

Total own-source revenue

51,653

44,630

38,630

Net cost of services

35,983

33,561

35,445

Revenue from Government

1.2C

35,037

33,322

35,246

(Deficit)

(946)

(239)

(199)

OTHER COMPREHENSIVE INCOME

Changes in asset revaluation reserve

32

-

-

Total other comprehensive income

32

-

-

Total comprehensive (deficit)

(914)

(239)

(199)

The above statement should be read in conjunction with the accompanying notes.

Budget Variances Commentary

Suppliers and Employee Benefits have increased to service the higher than budgeted fee for service work. Depreciation and amortisation is higher than budget due to the adoption of AASB 16 Leases and recognition of the associated right of use asset.

The majority of the increase in fee for service work is for Australian Government Departments. Interest is lower because of reduced rates of interest.

Balance sheet

Statement of Financial Position

as at 30 June 2020

2020

2019

Original Budget

Notes

$’000

$’000

$’000

ASSETS

Financial assets

Cash and cash equivalents

2.1A

100,843

80,072

75,083

Trade and other receivables

2.1B

7,844

16,143

10,456

Total financial assets

108,687

96,215

85,539

Non-financial assets1

Buildings

2.2A

34,024

3,991

3,529

Plant and equipment

2.2A

3,323

3,816

5,085

Intangibles

2.2A

-

75

164

Prepayments

2,316

2,000

2,819

Total non-financial assets

39,663

9,882

11,597

Total assets

148,350

106,097

97,136

LIABILITIES

Payables

Suppliers

4,929

3,862

6,499

Contract liability

58,684

51,755

45,324

Other payables

2.3A

723

5,154

-

Total payables

64,336

60,771

51,823

Interest bearing liabilities

Lease liability

2.4A

31,035

-

-

Total interest bearing liabilities

31,035

-

-

Provisions

Employee provisions

3.1

15,912

14,190

12,525

Make good provision

270

120

139

Total provisions

16,182

14,310

12,664

Total liabilities

111,553

75,081

64,487

Net assets

36,797

31,016

32,649

EQUITY

Contributed equity

30,424

28,549

30,424

Reserves

2,010

1,977

1,977

Retained surplus/(Accumulated deficit)

4,363

490

248

Total equity

36,797

31,016

32,649

The above statement should be read in conjunction with the accompanying notes.

1. Right-of-use assets are included in Buildings.

Budget Variances Commentary

Cash and cash equivalents have increased as the contract liability was higher than budgeted due to more payments in advance.

Non-financial assets (buildings) has increased due to adoption of AASB 16 Leases and recognition of the associated right-of-use asset.

Employee provisions are higher due to a present value adjustment of the long service leave balances arising from a fall in the 10 year bond rate and higher staff numbers.

Make good provision is higher due to an additional building lease.

Plant and equipment is lower than budget because of lower anticipated expenditure and a formal revaluation as at 30 June 2020.

Suppliers were estimated to be higher at year end, however, a large component of suppliers were paid on 30 June.

Statement of changes in equity

Statement of Changes in Equity

for the period ended 30 June 2020

2020

2019

Original Budget

Notes

$’000

$’000

$’000

CONTRIBUTED EQUITY

Opening balance

Balance carried forward from previous period

28,549

27,924

28,549

Transactions with owners

Contributions by owners

Equity injection - Appropriations

1,875

625

1,875

Total transactions with owners

1,875

625

1,875

Closing balance as at 30 June

30,424

28,549

30,424

RETAINED EARNINGS

Opening balance

Balance carried forward from previous period

490

729

447

Adjustment on initial application of AASB 16

4,820

-

-

Comprehensive income

Surplus/(Deficit) for the period

(946)

(239)

(199)

Total comprehensive income

(946)

(239)

(199)

Closing balance as at 30 June

4,364

490

248

ASSET REVALUATION RESERVE

Opening balance

Balance carried forward from previous period

1,977

1,977

1,977

Other comprehensive income

32

-

-

Total comprehensive income

32

-

-

Closing balance as at 30 June

2,009

1,977

1,977

TOTAL EQUITY

Opening balance

Balance carried forward from previous period

31,016

30,630

30,973

Adjustment on initial application of AASB 16

4,820

-

-

Adjusted opening balance

35,836

30,630

30,973

Comprehensive income

Surplus/(Deficit) for the period

(946)

(239)

(199)

Other comprehensive income / (losses)

32

-

-

Total comprehensive income / (losses)

(914)

(239)

(199)

Transactions with owners

Contributions by owners

Equity injection - Appropriations

1,875

625

1,875

Total transactions with owners

1,875

625

1,875

Closing balance as at 30 June

36,797

31,016

32,649

The above statement should be read in conjunction with the accompanying notes.

Equity injections


Amounts that are designated as equity injections for a year are recognised directly in contributed equity in that year.

Cash flow statement

Cash Flow Statement

for the period ended 30 June 2020

2019

2019

Original Budget

Notes

$’000

$’000

$’000

OPERATING ACTIVITIES

Cash received

Appropriations

35,037

33,322

35,246

Sale of goods and rendering of services

67,095

46,525

37,000

Interest

1,510

2,304

1,600

GST received

-

2,773

-

Other

-

5

30

Total cash received

103,642

84,929

73,876

Cash used

Employees

42,939

40,495

39,585

Suppliers

36,607

37,770

33,319

Interest payments on lease liabilities

280

-

-

Total cash used

79,826

78,265

72,904

Net cash from operating activities

23,816

6,664

972

INVESTING ACTIVITIES

Cash used

Purchase of property, plant and equipment

(1,370)

(1,872)

(2,847)

Total cash used

(1,370)

(1,872)

(2,847)

Net cash from/(used by) investing activities

(1,370)

(1,872)

(2,847)

FINANCING ACTIVITIES

Cash received

Appropriations - equity injection

1,875

625

1,875

Total cash received

1,875

625

1,875

Cash used

Principal payments of lease liabilities

(3,550)

-

-

Total cash used

(3,550)

-

-

Net cash from/(used by) financing activities

(1,675)

625

1,875

Net increase in cash held

20,771

5,417

5,694

Cash and cash equivalents at the beginning of the reporting period

80,072

74,655

75,083

Cash and cash equivalents at the end of the reporting period

100,843

80,072

75,083

The above statement should be read in conjunction with the accompanying notes.

Budget Variances Commentary

Supplier and employee costs have increased to service the higher than budgeted fee-for-service work.

Sale of goods and rendering services are higher than budget due to more advance payments received for revenue projects.