Go to top of page

Departmental Accounts

Introduction

Departmental assets, liabilities, revenue and expenses are those items that an entity has control over and include ordinary operating costs and associated funding, salaries, employee entitlements and operational expenses.

Statement of comprehensive income ($’000)

for the period ended 30 June 2020

Notes

2020

2019

Budget
2020

Variance from Budget

NET COST OF SERVICES

EXPENSES

Employee benefits

A

7,026

7,017

7,858

(832)

Supplier expenses

A

3,554

3,379

6,652

(3,098)

Depreciation and amortisation

C,D

671

434

550

121

Interest on lease liabilities

F

61

61

Asset revaluation decrements

17

17

Total expenses

11,329

10,830

15,060

(3,731)

OWN‑SOURCE INCOME

Staff secondments

350

310

382

(32)

Resources received

298

298

320

(22)

Asset revaluation increments

10

10

Total own‑source income

658

608

702

(44)

Net cost of services

(10,671)

(10,222)

(14,358)

3,687

APPROPRIATION FUNDING

Revenue from government

13,808

11,723

13,808

Total appropriation funding

13,808

11,723

13,808

Surplus (deficit)

3,137

1,501

(550)

3,687

OTHER COMPREHENSIVE INCOME

Asset revaluation

338

338

Comprehensive income

3,475

1,501

(550)

4,025

The above statement should be read in conjunction with the accompanying notes. Note J discusses variances between actuals and Budget released in April 2019 (Budget figures are not audited).

Statement of financial position ($’000)

as at 30 June 2020

Notes

2020

2019

Budget
2020

Variance from Budget

ASSETS

Financial assets:

Cash and cash equivalents

100

73

73

27

Receivables

B

27,448

24,946

23,523

3,925

Non‑financial assets:

Property, plant and equipment

C

6,478

1,786

2,016

4,462

Computer software

D

619

780

992

(373)

Supplier prepayments

152

60

223

(71)

Total assets

34,797

27,645

26,827

7,970

LIABILITIES

Payables:

Supplier payables

177

237

136

41

Salary and superannuation

117

48

301

(184)

Provisions:

Employee provisions

E

2,556

2,853

2,187

369

Lease liabilities

F

4,600

4,600

Other provisions

G

460

418

418

42

Total liabilities

7,910

3,556

3,042

4,868

Net assets

26,887

24,089

23,785

3,102

EQUITY

Retained surplus

35,105

31,968

31,167

3,938

Asset revaluation reserve

338

338

Contributed equity

(8,556)

(7,879)

(7,382)

(1,174)

Total equity

26,887

24,089

23,785

3,102

The above statement should be read in conjunction with the accompanying notes. Note J discusses variances between actuals and Budget released in April 2019 (Budget figures are not audited).

Current/non current balances ($’000)

2020

2019

Current assets

13,249

14,316

Non‑current assets

21,548

13,329

Current liabilities

(1,104)

802

Non‑current liabilities

(6,806)

2,754

Statement of changes in equity ($’000)

for the period ended 30 June 2020

Notes

2020

2019

Budget
2020

Variance from Budget

RETAINED SURPLUS

Opening balance

31,968

30,467

31,717

251

Surplus (deficit)

3,137

1,501

(550)

3,687

Retained surplus

35,105

31,968

31,167

3,938

ASSET REVALUATION RESERVE

Opening balance

Revaluation

338

338

Asset revaluation reserve

338

338

CONTRIBUTED EQUITY

Opening balance

(7,879)

(5,551)

(7,741)

(138)

Capital injection

359

710

359

Appropriations extinguished

I

(1,036)

(3,038)

(1,036)

Contributed equity

(8,556)

(7,879)

(7,382)

(1,174)

Total equity

26,887

24,089

23,785

3,102

The above statement should be read in conjunction with the accompanying notes. Note J discusses variances between actuals and Budget released in April 2019 (Budget figures are not audited).

The AOFM is not aware of any quantifiable or unquantifiable departmental contingencies as of the signing date that may have a significant impact on its operations.

Statement of cash flows ($’000)

for the period ended 30 June 2020

Notes

2020

2019

Budget
2020

Variance from Budget

NET CASH FROM OPERATING ACTIVITIES

Appropriations: Operating

11,070

9,400

13,765

(2,695)

GST received from ATO

5

6

5

Services and other

382

475

382

Employees

(7,378)

(6,556)

(7,815)

437

Suppliers

(3,384)

(2,844)

(6,332)

2,948

Interest paid on leases

(61)

(61)

GST paid to ATO

(3)

(3)

Transfers to OPA (a)

(384)

(481)

(384)

H

247

247

NET CASH FROM INVESTING ACTIVITIES

Purchase of assets

(10)

(19)

(359)

349

(10)

(19)

(359)

349

NET CASH FROM FINANCING ACTIVITIES

Appropriations: Capital

10

19

359

(349)

Lease liability

(220)

(220)

(210)

19

359

(569)

Net change in cash held

27

27

+ cash held at the beginning of period

73

73

73

Cash held at the end of the period

100

73

73

27

The above statement should be read in conjunction with the accompanying notes. Note J discusses variances between actuals and Budget released in April 2019 (Budget figures are not audited).

(a) Non appropriation receipts are required to be returned to the Official Public Account (OPA). They increase the AOFM’s available appropriation under section 74 of the Public Governance, Performance and Accountability Act 2013 and when subsequently drawn down for use by the AOFM they are recorded as appropriations.

Note A: Expenses

Employee benefits ($’000)

2020

2019

Wages and salaries

6,303

5,555

Superannuation

978

1,049

Leave entitlements

(271)

398

Other employee expenses

16

15

Total

7,026

7,017

The below table sets out the CEO’s actual remuneration (on an accruals basis).

Key Management Personnel ($’000)

2020

2019

Salary and other short‑term benefits

342

365

Annual leave accrued

29

29

Long service leave accrued

11

10

Post employment benefits (superannuation)

53

51

Total

435

455

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly. The Chief Executive Officer (CEO), the Secretary to the Treasury and the Treasurer have been determined to be key management personnel for the AOFM. The CEO only is remunerated by the AOFM.

Supplier expenses ($’000)

2020

2019

Internal and external audit services

424

486

Consultants

468

60

Corporate support services

896

828

Legal

206

54

Market data services

513

522

Operating lease payments — premises (a)

264

Travel

207

233

Treasury management system

257

240

Workers compensation premium

25

24

Other

558

668

Total

3,554

3,379

(a) With the adoption of AASB 16 Leases from 1 July 2019, lease payments on premises are divided into a principal component and an interest component. The interest component is not charged to supplier expenses.

Note B: Receivables

Accounting policy

Receivables are measured at fair value on initial recognition and at amortised cost on subsequent measurement.

Appropriations receivable are recognised at their nominal amounts. Appropriations receivable are appropriations controlled by the AOFM but held in the OPA under the government’s ‘just in time’ drawdown arrangements.

Receivables ($’000)

2020

2019

Goods and services (related)

83

16

Appropriations receivable

27,365

24,930

GST

Total

27,448

24,946

No receivable is overdue. All receivables are with related entities.

Recovery of receivables expected in ($’000)

2020

2019

No more than 12 months

12,997

14,183

More than 12 months

14,451

10,763

Total

27,448

24,946

Note C: Property, plant and equipment

Accounting policy

Asset recognition threshold on acquisition

Purchases of leasehold improvements are recognised initially at cost except for purchases costing less than $10,000 which are expensed at the time of acquisition. For leasehold improvements the estimated cost of removal and restoring the leased premises to their original condition is included in the initial cost of leasehold improvements.

AASB 16 Leases became operational for annual periods beginning on or after 1 January 2019. The AOFM has applied the Standard from 1 July 2019. AASB 16 sets out the rules for recognition, measurement and disclosure of leases and requires most leases to be recognised under a single lease model, removing the distinction between finance and operating leases. It requires a lessee to recognise a “right of use asset” and a lease liability on its balance sheet.

On 1 July 2019, the AOFM recognised as a lease liability its obligations arising from the lease of its office premises within the Treasury Building for the expected remaining term. The lease term ends on 21 December 2025 and there are two 5‑year extension options exercisable by the AOFM (which the AOFM is planning to exercise). A right of use asset was initially recognised on 1 July 2019 and measured at a value equivalent to the lease liability. The right of use asset is subsequently depreciated using the straight line method to the end of the expected lease term. Comparatives have not been restated with the adoption of AASB 16.

Purchases of plant and equipment are recognised initially at cost except for purchases costing less than $1,000 which are expensed at the time of acquisition.

Revaluations

Following initial recognition at cost, those items of property, plant and equipment whose fair value can be measured reliably are valued with sufficient frequency to ensure that the carrying amounts of assets do not materially differ from fair value as at the reporting date. Fair value is determined by depreciated replacement cost for leasehold improvements and by secondary market information for plant and equipment.

A valuation was conducted by an independent valuer, Jones Lang LaSalle, as at 31 March 2020. A revaluation gain of $390,064 was recorded for leasehold improvements, of which $10,502 was recognised as revenue in the Statement of Comprehensive Income (to reverse revaluation decrements recognised as expenses in previous reporting periods), and $379,562 was recognised in an Asset Revaluation Reserve in Equity. A revaluation loss of $17,450 was recorded for plant and equipment, and recognised as an expense in the Statement of Comprehensive Income. As at 30 June 2020, the AOFM had cumulative net revaluation losses of $81,065 for plant and equipment which were recognised as expenses in the Statement of Comprehensive Income in this reporting period and previous reporting periods.

Right of use assets are retained at cost and are not subject to periodic revaluation.

Property, plant and equipment ($’000)

2020

2019

Gross value:

Leasehold improvements

1,987

1,924

Plant and equipment

292

441

Right of use asset — lease premises

4,820

Accumulated depreciation:

Leasehold improvements

(323)

(472)

Plant and equipment

(5)

(107)

Right of use asset — lease premises

(293)

Total

6,478

1,786

No indicators of impairment were identified for property, plant and equipment.

Reconciliation of changes in gross value ($’000)

2020

2019

Opening value

2,365

2,354

Purchases

10

11

Initial recognition of right of use asset

4,820

Revaluation increment (decrement)

(96)

Closing value

7,099

2,365

Reconciliation of changes in accumulated depreciation ($’000)

2020

2019

Opening value

(579)

(307)

Depreciation charge for period

Leasehold improvements

(178)

(225)

Plant and equipment

(40)

(47)

Right of use asset

(293)

Revaluation increment (decrement)

469

Closing value

(621)

(579)

Depreciation

Leasehold improvements are depreciated using the straight line method over the expected lease term.

The right of use asset is depreciated using the straight line method over the expected lease term.

Plant and equipment is depreciated using the straight line method, on the basis of the following useful lives.

Useful life

2020

2019

Artwork

100 years

100 years

Furniture and fittings

Lease term

Lease term

ICT equipment

3‑5 years

3‑5 years

Useful lives are assessed annually and revised if necessary to reflect current estimates of an asset’s useful life to the AOFM. Revisions in useful life affect the rate of depreciation applied for the current period and future periods.

The useful lives of leasehold improvements and furniture and fittings were reassessed in 2019‑20. This has resulted in reduced depreciation expenses of $58,000 for 2019‑20 (2018‑19: nil).

Note D: Computer software

Accounting policy

Asset recognition threshold on acquisition

Purchases of computer software are recognised initially at cost except for purchases costing less than $10,000 which are expensed at the time of acquisition.

An item of software represents a software licence granted for greater than 12 months; or a developed software application.

Developed software is recognised by capitalising all directly attributable internal and external costs that enhance software’s functionality and therefore service potential. Software assets are retained at cost and are not subject to periodic revaluation.

Computer software ($’000)

2020

2019

Gross value

1,520

1,521

Accumulated amortisation

(901)

(741)

Total

619

780

No indicators of impairment were identified for computer software.

Amortisation

Software assets are amortised using the straight line method over their anticipated useful lives, being three to ten years (2018‑19: three to ten years).

Reconciliation of changes in accumulated amortisation ($’000)

2020

2019

Opening value

(741)

(579)

Amortisation charge for period

(160)

(162)

Closing value

(901)

(741)

Note E: Employee provisions

Accounting policy

Leave

The liability for employee benefits includes provisions for annual leave and long service leave. No provision has been made for sick leave as sick leave is non vesting and the average sick leave taken in future years by employees of the AOFM is estimated to be less than the annual entitlement for sick leave.

Long service leave and annual leave are measured at the present value of the estimated future payments to be made. In determining the present value, the AOFM commissions a periodic actuarial assessment.

Superannuation

The AOFM contributes to defined benefit superannuation schemes (the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme) and accumulation plans (defined contribution schemes) on behalf of staff.

The AOFM accounts for its superannuation contributions as if they were defined contribution plans, i.e. it has no ongoing liability to report. The superannuation benefits payable to an employee upon termination of employment with the Australian Government from defined benefit schemes is recognised in the financial statements of the Department of Finance and is settled by the Australian Government in due course.

An on cost liability is recognised for superannuation contributions payable on accrued annual leave and long service leave as at the end of the financial year.

Employee provisions ($’000)

2020

2019

Annual leave

589

557

Long service leave

1,645

1,948

Superannuation

322

348

Total

2,556

2,853

Payment of employee provisions expected in ($’000)

2020

2019

No more than 12 months

585

517

More than 12 months

1,971

2,336

Total

2,556

2,853

Note F: Lease liabilities

Accounting policy

AASB 16 Leases became operational for annual periods beginning on or after 1 January 2019. The AOFM has applied the Standard from 1 July 2019. AASB 16 sets out the rules for recognition, measurement and disclosure of leases and requires most leases to be recognised under a single lease model, removing the distinction between finance leases and operating leases. It requires lessees to recognise a “right of use asset” and a lease liability on its balance sheet. On 1 July 2019, the AOFM recognised as a lease liability its obligations arising from the lease of its office premises within the Treasury Building for the expected remaining term. The lease liability is initially measured at the present value of the estimated future lease payments as at 1 July 2019, discounted at the Australian Government’s borrowing rate. The lease liability is subsequently measured at amortised cost using the effective interest method. Comparatives have not been restated with the adoption of AASB 16.

Lease liability ($’000)

2020

2019

Opening value

Recognised on adoption of AASB 16

4,820

Amounts recognised in profit or loss:

Interest expense on lease liability

61

Amounts recognised in cash flow:

Lease payments

(281)

Closing value

4,600

Discounted amount recognised in the Statement of Financial Position:

Current

225

Non‑current

4,375

Total

4,600

Future estimated lease payments ($’000)

2020

2019

Undiscounted cash flows:

Less than 1 year

289

281

One to five years

1,209

1,187

More than five years

3,660

3,971

Total

5,158

5,439

Note G: Other provisions

Other provisions are for the restoration costs of the AOFM’s leasehold premises on expiry of its lease. The AOFM lease for its office premises ends on 21 December 2025, there are two 5 year extension options exercisable at AOFM’s discretion.

Other provisions ($’000)

2020

2019

Makegood on leasehold premises

460

418

Total

460

418

Reconciliation of movements in other provisions ($’000):

2020

2019

Opening balance

418

418

Re‑measurements (a)

42

Total

460

418

Other provisions expected to be settled in ($’000)

2020

2019

No more than 12 months

More than 12 months

460

418

Total

460

418

(a) In accordance with AASB Interpretation 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities, the provision increment has been recognised as an adjustment to the Asset Revaluation Reserve in Equity.

Note H: Cash flow reconciliation

The following table reconciles the AOFM’s operating cash flows as presented in the Statement of Cash Flows to its net cost of services presented in the Statement of Comprehensive Income.

2020

2019

Net cost of services

(10,671)

(10,222)

Add revenue from Government

13,808

11,723

Adjustments for non‑cash items:

Depreciation and amortisation

671

434

Appropriations extinguished

(1,036)

(3,038)

Net revaluation losses

7

Change in receivables for capital budget items

350

699

Adjustments for changes in assets:

(Increase) decrease in receivables

(2,502)

(360)

(Increase) decrease in supplier prepayments

(92)

163

Adjustments for changes in liabilities:

Increase (decrease) in supplier payables

(60)

101

Increase (decrease) in salary and superannuation

69

1

Increase (decrease) in employee provisions

(297)

499

Net cash from operating activities

247

Note I: Appropriations

The following table outlines appropriations for the period and the amount of appropriations utilised for the period.

Annual appropriations ($’000)

2020

2019

Annual appropriations:

Outputs

13,808

11,723

Departmental capital budget (a)

359

710

Appropriation withheld

Public Governance, Performance and Accountability
Act 2013:

Section 74 — retained receipts

384

481

Total available for payment

14,551

12,914

Appropriation applied (current and prior years)

(11,053)

(9,419)

Variance

3,498

3,495

(a) On 11 October 2018, the Minister for Finance approved the reclassification of $350,000 of departmental capital funding to departmental operating funding on an ongoing basis from 2019‑20.

The variance in departmental appropriations available to appropriations applied (spent) is explained by lower than planned staff and supplier costs, including from the implementation and management of the Australian Business Securitisation Fund (the ABSF).

The following table outlines the unspent balance of appropriations available to the AOFM as at the end of the reporting period.

Unspent departmental annual appropriations ($’000)

2020

2019

Acts repealed on 1 July 2019:

Supply Act (No. 1) 2016‑17

2,687

Appropriation Act (No. 1) 2016‑17

201

Appropriation Act (No. 2) 2016‑17

150

3,038

Acts repealed on 1 July 2020:

Appropriation Act (No. 1) 2017‑18

1,036

12,089

1,036

12,089

Acts to be repealed on or after 1 July 2021:

Appropriation Act (No. 1) 2018‑19

11,980

11,980

Appropriation Act (No. 3) 2018‑19

934

934

Supply Act (No. 1) 2019‑20

6,002

Appropriation Act (No. 1) 2019‑20

8,549

27,465

12,914

Total

28,501

28,041

Represented By:

Cash at bank

100

73

Appropriations receivable

27,365

24,930

Appropriations extinguished — 1 July

1,036

3,038

Total

28,501

28,041

Note J: Budgetary report to outcome comparison

The Budget figures shown in the primary financial statements represent the original Budget released in April 2019. The Budget figures are not audited.

Judgement is applied when determining variances requiring explanation. Considerations include the value of the variance, the nature of the item and its usefulness in analysing financial performance.

Significant variances in the Departmental financial statements

AASB 16 Leases became operational on 1 July 2019. At that time the AOFM recognised a ‘lease liability’ and a ‘right of use asset’ for $4.8 million in relation to the lease on its office premises. This had the effect of grossing up the AOFM’s balance sheet. In addition, from 1 July 2019 the AOFM recognised interest charges on the lease liability and depreciation on the right of use asset. In accordance with instructions from the Department of Finance, the impact of AASB 16 Leases was not incorporated into the 2019‑20 Budget (in April 2019). The 2019‑20 Budget was prepared under AASB 117, whereby the lease on AOFM’s office premises was recognised as an operating lease. Operating leases recognised lease payments as expenses and did not recognise a lease liability or a right of use asset.

On 31 March 2020, the AOFM conducted a revaluation of its property, plant and equipment assets. Also at that time the AOFM conducted a re‑measurement of $41,800 to the make‑good liability on its leasehold premises. As a result of the re‑measurements, the AOFM recorded a net gain of $337,762 to an Asset Revaluation Reserve, an expense of $17,450 and income of $10,502. The revaluation was not forecast in the Budget.

Employee expenses were lower than forecast at Budget by $0.8 million. During 2019‑20 the AOFM sought to increase its staffing levels for the purposes of implementing and administering the Australian Business Securitisation Fund (the ABSF). Whilst the AOFM establishment size increased by 7 full time equivalents from 30 June 2019 (37) to 30 June 2020 (44), the average staffing level for 2019‑20 was 39 against forecasts of 47. A range of external advisory services have also been utilised in place of staff. This resulted in lower than expected staff costs. During 2020‑21 the AOFM will increase its establishment size in response to ongoing commitments particularly in relation to the ABSF and the Structured Finance Support Fund (the SFSF).

Supplier expenses were lower than forecast at Budget by $3.1 million. During 2019‑20 the AOFM received additional appropriation funding to meet anticipated additional consultancy, legal, information technology, assurance and other administrative costs arising from implementing and managing the ABSF. The AOFM has underspent as compared to Budget forecasts in this regard.

Basis of preparation of the financial statements

The Australian Office of Financial Management is a listed entity under the Public Governance, Performance and Accountability Act 2013. The AOFM is a not‑for‑profit Australian Government entity.

These financial statements cover the AOFM as an administrative entity of the Commonwealth of Australia and are for the reporting period 1 July 2019 to 30 June 2020. They are required by section 42 of the Public Governance, Performance and Accountability Act 2013, and are general purpose financial statements prepared on a going concern basis.

The financial statements have been prepared in accordance with:

  • the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and
  • Australian Accounting Standards that apply for the reporting period.

The financial statements have been prepared on an historical cost basis, except for certain assets and liabilities which are carried at fair value or on a discounted cash flow basis as required or allowable by relevant accounting standards.

The financial statements are presented in Australian dollars and values are rounded as indicated.

The continued existence of the AOFM in its present form, and with its present outcome and program, is dependent on government policy and on continuing appropriations by Parliament for the AOFM’s administration and activities.

New Australian Accounting Standards applicable to the reporting period

During 2019‑20 the AOFM adopted all applicable Australian Accounting Standards that became effective during the reporting period.

The AOFM adopted AASB 16 Leases for the first time on 1 July 2019. In accordance with the requirement of the Standard the AOFM has recognised a right of use asset and a lease liability for the lease of its office premises within the Treasury Building. Further disclosures are made at Note C and F of the Departmental Financial Statements. The liability represents the discounted known future lease payments. Previously, under AASB 117 Leases, the lease of the office premises was recognised as an operating lease.

New Australian Accounting Standards applicable in future reporting periods

A number of revised or new Australian Accounting Standards have been issued that are effective for future reporting periods. These are not expected to significantly impact the AOFM’s accounts.

Post balance date events

Establishment of forbearance SPV

Since April 2020 the AOFM has been working on an initiative with the securitisation industry to develop a forbearance special purpose vehicle (SPV) to advance funds to eligible public and private securitisation vehicles seeking liquidity advances to compensate for a portion of the missed interest component of scheduled payments not received from borrowers who have received a payment moratorium due to the impact of coronavirus.

The AOFM appointed separate professional companies to perform the roles of trustee, manager and security trustee to operate the forbearance SPV. The AOFM also appointed a standby manager and a collateral verification agent to support the operations of the forbearance SPV.

The AOFM is the only senior financier of the forbearance SPV, and through the Structured Finance Support Fund acquires debt securities issued by the forbearance SPV. The proceeds raised by the issuance of debt securities to the AOFM, provides the forbearance SPV with the funding required to make liquidity payments (secured by an interest in underlying property) to eligible securitisation vehicles.

The forbearance SPV was established on 22 July 2020.

Litigation

On 22 July 2020 documents were filed with the Federal Court of Australia (FCA) bringing proceedings against the Commonwealth of Australia, the Secretary of the Department of the Treasury and the Chief Executive Officer of the AOFM. The statement lodged with the FCA states that the Applicant is the holder of and an investor in exchange‑traded Australian Government Bonds. The claim provides that the information statements published by the AOFM setting out information to potential investors about these financial products fail to disclose Australia’s climate change risks for investors. The Applicant further claims that as such the Commonwealth has breached its duties of disclosure under the Australian Securities and Investment Commission Act 2001, and the Treasury Secretary and the Chief Executive Officer of the AOFM have breached their duties under the Public Governance, Performance and Accountability Act 2013.

The Applicant has sought injunctive relief and is not making a claim for damages.

The Commonwealth rejects the claims and will be defending the claims in the legal action. Hearings are yet to commence.