Notes to the Financial Statements
Overview
The basis of preparation
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:
- Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
- 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 operating result or the financial position.
The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.
New accounting standards
A number of new and revised standards, interpretations and amending standards were issued by the Australian Accounting Standards Board prior to the sign-off date but are not applicable until future years.
New accounting standard AASB 16 Leases, will have a material effect on the APSC’s financial statements:
- ‘Right of use’ lease assets and lease liabilities of $10.1 million will be recognised on 1 July 2019.
- Existing operating lease rental payables of $0.4 million and operating lease prepayments of $0.1 million will be derecognised on 1 July 2019.
- During 2019-20, operating lease rental expense of $1.6 million will be derecognised, with right of use asset depreciation of $1.6 million and lease interest of $0.1 million to be recognised.
All other new and revised standards, interpretations and amending standards are not expected to have a material effect on the APSC’s financial statements.
Accounting Judgements and Estimates
No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next reporting period.
Cash
Cash is recognised at its nominal amount. Cash and cash equivalents includes:
- cash on hand and
- cash held by outsiders.
Taxation
The APSC is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).
Revenues, expenses, assets and liabilities are recognised net of GST except:
- where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
- for receivables and payables.
Reporting of administered activities
Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.
Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.
Events After the Reporting Period
There were no subsequent events that had the potential to affect the ongoing structure and financial activities of the APSC for either departmental or administered activities.
NOTE 1: DEPARTMENTAL FINANCIAL PERFORMANCE
This section analyses the financial performance of the APSC for the year ended 2019.
Note 1.1: Expenses
2019 $’000 |
2018 $’000 |
|
---|---|---|
Note 1.1a: Employee benefits |
||
Wages and salaries |
19,874 |
19,236 |
Superannuation |
||
Defined contribution plans |
1,882 |
1,771 |
Defined benefit plans |
1,920 |
1,939 |
Leave and other entitlements |
2,536 |
2,359 |
Separation and redundancies |
85 |
708 |
Total employee benefits |
26,297 |
26,013 |
Accounting policy
The accounting policy for employee related expenses is contained in note 5.1 Employee provisions.
Note 1.1b: Suppliers |
||
Goods and services supplied or rendered |
||
Consultants |
1,049 |
729 |
Contractors |
8,179 |
8,233 |
Travel |
903 |
748 |
Venue hire and catering |
1,119 |
901 |
Training |
300 |
300 |
Information and communications technology |
2,759 |
2,759 |
Facilities expense |
199 |
191 |
Other goods and services |
748 |
828 |
Total goods and services supplied or rendered |
15,256 |
14,689 |
Other suppliers |
||
Operating lease rentals |
1,622 |
2,023 |
Workers compensation expenses |
460 |
438 |
Total other suppliers |
2,082 |
2,461 |
Total suppliers |
17,338 |
17,150 |
Leasing commitments
The APSC in its capacity as lessee has three leases for office accommodation and one vehicle lease. Each office accommodation lease has annual fixed percentage increases in the lease payments. For all three accommodation leases, the initial period of office accommodation is still current and these leases do not have purchase options. The lease for the head office has the option to renew for two five year periods, whilst the other two accommodation leases do not have renewal options.
The lease for the head office commenced in July 2017 and the commitment is approximately $11.3 million over a lease term of 9 years and 8 months.
2019 $’000 |
2018 $’000 |
|
---|---|---|
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: |
||
Within 1 year |
1,562 |
1,501 |
Between 1 to 5 years |
5,528 |
5,840 |
More than 5 years |
3,362 |
4,595 |
Total operating lease commitments |
10,452 |
11,936 |
Commitments are disclosed net of GST.
Accounting policy
Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.
Note 1.1c: Impairment loss allowance on financial instruments |
||
Impairment on goods and services receivable |
4 |
- |
Total write-down and impairment of assets |
4 |
- |
Note 1.1d: Write-down and impairment of other assets |
||
Impairment of intangibles |
860 |
- |
Total write-down and impairment of other assets |
860 |
- |
Note 1.2: Own-source revenue
2019 $’000 |
2018 $’000 |
|
---|---|---|
Own-source revenue |
||
Note 1.2a: Sale of goods and rendering of services |
||
Sale of goods |
2 |
3 |
Rendering of services |
22,414 |
20,874 |
Total sale of goods and rendering of services |
22,416 |
20,877 |
Accounting policy
Revenue from the sale of goods is recognised when:
- the risks and rewards of ownership have been transferred to the buyer
- the APSC retains no managerial involvement nor effective control over the goods.
The stage of completion of contracts at the reporting date is determined by reference to services performed to date as a percentage of total services to be performed.
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 the collectability of the debt is no longer probable.
Note 1.2b: Resources received free of charge |
||
Audit services |
41 |
40 |
Accounting policy
Resources received free of charge are recognised as revenue 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.
Revenue from Government
2019 $’000 |
2018 $’000 |
|
Note 1.2c: Revenue from Government |
||
Appropriations |
||
Departmental appropriations |
21,299 |
22,811 |
Total revenue from Government |
21,299 |
22,811 |
Accounting policy
Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the APSC 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: EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT
This section analyses the activities that the APSC does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.
Note 2.1: Administered - expenses
Note 2.1a: Employee Benefits
2019 $’000 |
2018 $’000 |
|
Employee benefits |
||
Wages and salaries |
4,140 |
33,342 |
Total employee benefits |
4,140 |
33,342 |
NOTE 3: DEPARTMENTAL FINANCIAL POSITION
This section analyses the APSC’s assets used to conduct its operations and the operating liabilities incurred as a result. Employee related information is disclosed in the People and Relationships section, Note 5.
Note 3.1: Financial assets
Note 3.1a: Trade and other receivables
2019 $’000 |
2018 $’000 |
|
Trade and other receivables |
||
Goods and services |
1,983 |
1,576 |
Appropriation receivable |
14,458 |
15,359 |
GST receivable from the Australian Taxation Office |
523 |
525 |
Total trade and other receivables (gross) |
16,964 |
17,460 |
Less impairment loss allowance - Goods and services |
(4) |
- |
Total trade and other receivables (net) |
16,960 |
17,460 |
Credit terms for goods and services are within 30 days (2018: 30 days).
Accounting policy
Trade receivables that are held for the purpose of collecting the contractual cash flows, where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.
Note 3.2: Non-financial assets
Note 3.2a: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles
Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2019
Buildings |
Plant and equipment |
Computer software |
Other intangibles |
Total |
|
---|---|---|---|---|---|
2019 |
$’000 |
$’000 |
$’000 |
$’000 |
$’000 |
As at 1 July 2018 |
|||||
Gross book value |
6,340 |
2,063 |
4,678 |
97 |
13,178 |
Accumulated depreciation, amortisation and impairment |
(582) |
(537) |
(2,982) |
(97) |
(4,198) |
Total as at 1 July 2018 |
5,758 |
1,526 |
1,696 |
- |
8,980 |
Additions – by purchase |
125 |
1,202 |
299 |
- |
1,626 |
Revaluations and impairments recognised in other comprehensive income |
- |
(203) |
- |
- |
(203) |
Impairments recognised in net cost of services |
- |
- |
(860) |
- |
(860) |
Depreciation and amortisation |
(764) |
(360) |
(459) |
- |
(1,583) |
Disposals |
- |
(10) |
(41) |
- |
(51) |
Total as at 30 June 2019 |
5,119 |
2,155 |
635 |
- |
7,909 |
Total as at 30 June 2019 represented by |
|||||
Gross book value |
6,465 |
2,155 |
3,264 |
64 |
11,948 |
Accumulated depreciation, amortisation and impairment |
(1,346) |
- |
(2,629) |
(64) |
(4,039) |
Total as at 30 June 2019 |
5,119 |
2,155 |
635 |
- |
7,909 |
Property, plant and equipment and intangibles were assessed for impairment as at 30 June 2019. Software with a value of $860,000 was assessed as impaired (2018: nil). Property, plant and equipment and intangibles with a net value of $88,000 are expected to be disposed of within the next 12 months (2018: nil).
Revaluation of non-financial assets
Revaluations are conducted in accordance with the revaluation policy contained in this note. Plant and equipment was revalued by an independent valuer during 2019 (2018: nil). There was a revaluation decrement of $203,000 (2018: nil). All increments and decrements, to the extent that they reverse a previous increment, are transferred to the asset revaluation reserve by asset class and included in the equity section of the statement of financial position. No decrements due to revaluation were expensed in 2019 (2018: nil).
Contractual commitments for the acquisition of property, plant, equipment and intangible assets
There are no significant contractual commitments for the acquisition of property, plant and equipment and intangible assets (2018: nil).
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.
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.
Asset recognition threshold
Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases of property, plant and equipment costing less than $2,000, or leasehold improvements costing less than $60,000, 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 the provision for restoration in property leases taken up by the APSC where there exists an obligation to restore the property to its original condition. These costs are included in the value of the APSC’s leasehold improvements with a corresponding provision for restoration recognised.
Revaluations
Following initial recognition at cost, property, plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not materially differ from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.
Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised in the surplus or deficit. Revaluation decrements for a class of assets are recognised directly in the surplus or deficit except to the extent that they reverse 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 property, plant and equipment assets are written off to their estimated residual values over their estimated useful lives to the APSC 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:
Asset class 2019 2018
Leasehold improvements Expected lease term Expected lease term
Property, plant and equipment 1 to 13 years 1 to 13 years
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 property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.
Intangibles
The APSC’s intangibles comprise intellectual property, purchased software and internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses where the value of the asset exceeds $2,000 for purchased software and $60,000 for internally developed software and intellectual property.
Intangibles are amortised on a straight-line basis over their anticipated useful life. The useful lives of the APSC’s intangibles are between 2 to 10 years (2018: 2 to 10 years).
All intangible assets were assessed for impairment as at 30 June 2019.
Note 3.2b: Prepayments paid
2019 $’000 |
2018 $’000 |
|
Prepayments paid |
||
Suppliers |
477 |
561 |
Total prepayments paid |
477 |
561 |
No indicators of impairment were found for prepayments paid.
Note 3.3: Payables
2019 $’000 |
2018 $’000 |
|
Note 3.3a: Suppliers |
||
Trade creditors and accruals |
3,769 |
3,101 |
Operating lease rentals |
371 |
275 |
Total suppliers |
4,140 |
3,376 |
Note 3.3b: Prepayments received |
||
Rendering of services |
5,899 |
5,795 |
Total prepayments received |
5,899 |
5,795 |
Note 3.3c: Other payables |
||
Wages and salaries |
166 |
152 |
Superannuation |
28 |
26 |
Separations and redundancies |
47 |
536 |
Other |
71 |
73 |
Total other payables |
312 |
787 |
Accounting policy
Suppliers 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). Supplier and other payables are recognised and derecognised upon trade date.
Operating lease rentals are expensed on a straight-line basis, which is representative of the pattern of benefits derived from the leased assets.
Prepayments received are recognised for payments received for services that are not yet fully performed. This is measured in accordance with the accounting policy in note 1.2a for own-source revenue.
The wages and salaries payable and superannuation payable represent outstanding contributions for a portion of the final fortnight of the financial year.
The APSC recognises a payable for separation and redundancy benefit payments when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.
Note 3.4: Other provisions
Note 3.4a: Provision for restoration
2019 $’000 |
2018 $’000 |
|
As at 1 July |
245 |
285 |
Additional provisions made |
- |
95 |
Amounts used |
- |
(139) |
Unwinding of discount or change in discount rate |
5 |
4 |
Total as at 30 June |
250 |
245 |
The APSC currently has two (2018: two) leasing agreements which have provisions requiring the APSC to restore the premises to their original condition at the conclusion of the lease. The APSC has made provisions to reflect the present value of these obligations.
There was no revaluation of the provision for restoration (2018: no revaluation).
NOTE 4: FUNDING
This section identifies the APSC’s funding structure.
Note 4.1: Appropriations
Note 4.1a: Annual Appropriations ('Recoverable GST exclusive')
Departmental |
2019 $'000 |
2018 $'000 |
Annual Appropriation |
||
Ordinary annual services |
21,299 |
22,811 |
Capital Budget 1 |
411 |
414 |
Total Annual Appropriation |
21,710 |
23,225 |
Adjustments to appropriation |
||
PGPA Act section 74 receipts |
24,447 |
23,004 |
Total adjustments to appropriation |
24,447 |
23,004 |
Total Appropriation |
46,157 |
46,229 |
Appropriation applied (current and prior years) |
(46,771) |
(51,473) |
Variance 2 |
(614) |
(5,244) |
1. 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.
2. The variance in 2019 occurred due to the payment of accrued separation and redundancies.
The variance in 2018 occurred due to payments for major fit-out works, which resulted in higher cash outflows for the year.
Note 4.1b: Unspent Departmental Annual Appropriations (‘Recoverable GST exclusive’)
2019 $’000 |
2018 $’000 |
|
---|---|---|
Departmental |
||
Appropriation Act (No. 1) 2015-16 1 |
- |
9 |
Appropriation Act (No. 1) 2016-17 2 |
7 |
7 |
Appropriation Act (No. 1) 2017-18 |
- |
16,320 |
Appropriation Act (No. 1) 2018-19 |
15,707 |
- |
Total departmental |
15,714 |
16,336 |
1. In 2016, as announced in the 2015-16 Mid-year and Fiscal Economic Outlook, by agreement with the Department of Finance, the APSC relinquished control of surplus departmental appropriation funding of $9,000. This unused appropriation was permanently withheld by direction of a delegate for the Minister for Finance under section 51 of the PGPA Act during June 2016. This appropriation lapsed on 1 July 2018.
2. In 2017, by agreement with the Department of Finance, the APSC relinquished control of surplus departmental appropriation funding of $7,131. This unused appropriation was permanently withheld by direction of a delegate for the Minister for Finance under section 51 of the PGPA Act during June 2017. This appropriation lapsed on 1 July 2019.
Note 4.1c: Special Appropriations Applied ('Recoverable GST exclusive')
Appropriation applied |
||
---|---|---|
Authority |
2019 $’000 |
2018 $’000 |
Administered |
||
Remuneration Tribunal Act 1973 – section 7(13) 1 |
4,140 |
33,342 |
Remuneration and Allowances Act 1990 – section 8 2 |
- |
- |
Judicial and Statutory Officers (Remuneration and Allowances) Act 1984 – section 7(2) 3 |
- |
- |
Total special appropriations applied |
4,140 |
33,342 |
1. The Attorney-General’s Department drew from the Remuneration Tribunal Act 1973 - section 7(13) for the purpose of making payments of Judicial Office Holders' remuneration and entitlements.
The Department of the House of Representatives and the Department of the Senate drew from the Remuneration Tribunal Act 1973 - section 7(13) for the purpose of making payments of Parliamentarians' remuneration and entitlements.
From 1 January 2018, the payment of Parliamentarians’ remuneration and entitlements by the Department of the House of Representatives and the Department of the Senate is funded by the Parliamentary Business Resources Act 2017, which is reported by the Department of Finance.
2. Due to amendments made in 2011 to the Remuneration Tribunal Act 1973, from 15 March 2012 payments are no longer made under this special appropriation.
3. No payment has been made under this special appropriation since it was transferred to the APSC in September 2010.
Note 4.2: Net cash appropriation arrangements
2019 $’000 |
2018 $’000 |
|
---|---|---|
Total comprehensive income less depreciation and amortisation expenses previously funded through revenue appropriations |
(1,048) |
298 |
Plus: depreciation and amortisation expenses previously funded through revenue appropriations |
(1,512) |
(1,457) |
Total comprehensive income/(loss) - as per the Statement of Comprehensive Income |
(2,560) |
(1,159) |
NOTE 5: PEOPLE AND RELATIONSHIPS
This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.
Note 5.1: Employee provisions
Note 5.1a: Employee provisions |
||
2019 $’000 |
2018 $’000 |
|
Employee provisions |
||
Leave |
7,622 |
7,164 |
Total employee provisions |
7,622 |
7,164 |
Accounting policy
Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits expected within twelve months of the end of the reporting period are measured at their nominal amounts.
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 APSC 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 that the leave is taken, including the APSC’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 using the Australian Government shorthand method for all employees as at 30 June 2019. The estimate of the present value of the liability takes into account attrition rates and pay rises through promotion and inflation.
Superannuation
APSC employees are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other superannuation funds held outside the Australian Government.
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’s administered schedules and notes.
The APSC makes employer contributions to the employees’ defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The APSC accounts for the contributions as if they were contributions to defined contribution plans.
Note 5.2: Key management personnel remuneration
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the APSC, directly or indirectly. The APSC has determined the key management personnel to be the Minister Assisting the Prime Minister for the Public Service and Cabinet and personnel within the APSC holding the following positions:
Australian Public Service Commissioner |
Deputy Australian Public Service Commissioner |
Merit Protection Commissioner |
First Assistant Public Service Commissioner |
Remuneration of key management personnel within the APSC is reported in the table below:
2019 |
2018 |
|
$’000 |
$’000 |
|
Short-term employee benefits |
1,531 |
1,590 |
Post-employment benefits |
205 |
169 |
Other long-term benefits |
34 |
74 |
Termination benefits |
- |
- |
Total key management personnel remuneration expenses 1 |
1,770 |
1,833 |
The total number of key management personnel that are included in the above table are seven (2018: six) due to changes in staff during the year. The KMP expense is lower in 2019 due to one position being unfilled for a portion of the year.
1. The above key management personnel remuneration excludes the remuneration and other benefits of the Minister Assisting the Prime Minister for the Public Service and Cabinet. The Minister's remuneration and other benefits are set by the Remuneration Tribunal and is paid through administered special appropriations of the Department of Finance.
Note 5.3: Related party disclosures
Related party relationships
The APSC is an Australian Government controlled entity. Related parties to the APSC are key management personnel including the Minister Assisting the Prime Minister for the Public Service and Executive, and other Australian Government entities.
Transactions with related parties
Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.
Other than the remuneration disclosed in note 5.2, there were no significant transactions with key management personnel (2018: nil).
The APSC undertakes a number of functions on behalf of the Australian Government. In performing these functions, the APSC transacts with other Australian Government controlled entities for normal day-to-day business operations provided either under normal terms and conditions or on a cost recovery basis.
The following significant transactions with related parties occurred during the financial year:
- About 99% of the APSC’s sale of goods and rendering of services revenue was earned from other Australian Government controlled entities (2018: 99%).
- The APSC leases its head office accommodation from the Department of Finance
(2018: the APSC entered an office lease commitment with the Department of Finance of approximately $11.3 million over 9 years and 8 months, with lease payments commencing in July 2017). - Information and communications technology services were provided by the Department of Employment, Skills, Small and Family Business and the Department of Prime Minister and Cabinet (2018: the Department of Jobs and Small Business provided information and communications technology services).
NOTE 6: MANAGING UNCERTAINTIES
This section analyses how the APSC manages financial risks within its operating environment.
Note 6.1: Contingent assets and liabilities
Departmental
Restoration obligations |
||
---|---|---|
2019 $'000 |
2018 $'000 |
|
Contingent liabilities |
||
Balance from previous period |
561 |
- |
New contingent liabilities recognised |
- |
561 |
Re-measurement |
14 |
- |
Total contingent liabilities |
575 |
561 |
The above table contains $575,000 of quantifiable contingent liabilities in respect of obligations to restore office premises to their original condition at the conclusion of the lease (2018: $561,000). The amount represents an estimate of the APSC’s liability based on the estimated per square metre restoration cost for the office. In accordance with the terms of the lease agreement, the restoration obligation only arises if requested by the landlord.
The APSC had no quantifiable or unquantifiable contingent assets as at 30 June 2019 (2018: nil).
The APSC had no unquantifiable contingent liabilities as at 30 June 2019 (2018: nil).
Administered
The APSC had no quantifiable or unquantifiable administered contingent assets or liabilities as at 30 June 2019 (2018: nil).
Accounting Policy
Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.
Note 6.2: Financial instruments
Note 6.2a: Categories of financial instruments
Notes |
2019 $’000 |
2018 $’000 |
|
Financial Assets under AASB 9 |
|||
Financial assets at amortised cost |
|||
Cash and cash equivalents |
933 |
571 |
|
Goods and services receivables (net) |
3.1a |
1,979 |
1,576 |
Total financial assets at amortised cost |
2,912 |
2,147 |
|
Total financial assets |
2,912 |
2,147 |
|
Financial Liabilities |
|||
Financial liabilities measured at amortised cost |
|||
Trade creditors and accruals |
3.3a |
3,769 |
3,101 |
Other payables |
3.3c |
71 |
73 |
Total financial liabilities measured at amortised cost |
3,840 |
3,174 |
|
Total financial liabilities |
3,840 |
3,174 |
|
Classification of financial assets on the date of initial application of AASB 9
Financial assets class |
Note |
AASB 139 original classification |
AASB 9 new classification |
AASB 139 carrying amount at 1 July 2018 |
AASB 9 carrying amount at 1 July 2018 |
Cash |
Loans and receivables |
Amortised Cost |
571 |
571 |
|
Trade and other receivables |
3.1a |
Loans and receivables |
Amortised Cost |
1,576 |
1,576 |
Total financial assets |
2,147 |
2,147 |
Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9
AASB 139 carrying amount at $'000 |
Reclassifi-cation $'000 |
Remeasure-ment $'000 |
AASB 9 carrying amount at |
|
Financial assets at amortised cost |
||||
Loans and receivables |
||||
Cash |
571 |
- |
- |
571 |
Trade and other receivables |
1,576 |
- |
- |
1,576 |
Total financial assets |
2,147 |
2,147 |
Accounting Policy
Financial Assets
With the implementation of AASB 9 Financial Instruments for the first time in 2019, the APSC classified its financial assets as ‘financial assets measured at amortised cost’. This classification was based on the APSC’s business model for managing the financial assets and contractual cash flows at the time of initial recognition.
Financial assets are recognised when the APSC 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’ 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 on the principal outstanding amount.
Amortised cost is determined using the effective interest method. Income is recognised on an effective interest rate basis for financial assets that are recognised at cost.
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.
Financial liabilities
The accounting policy for financial liabilities is contained in note 3.3 Payables.
Note 6.3: Fair value measurement
Note 6.3a: Fair value measurement
Fair value |
||
---|---|---|
2019 |
2018 $'000 |
|
Non-financial assets |
||
Leasehold improvements |
5,119 |
5,758 |
Plant and equipment |
2,155 |
1,526 |
Accounting Policy
All property, plant and equipment is measured at fair value, in accordance with the accounting policy.
The APSC’s assets are held for operational purposes and not held for the purposes of deriving a profit.
Fair value is estimated using replacement cost, which is depreciated based upon the expended and remaining useful life of each asset.
Visit
https://www.transparency.gov.au/annual-reports/australian-public-service-commission/reporting-year/2018-2019-62