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5. Other information

5.1 KEY MANAGEMENT PERSONNEL REMUNERATION

KEY MANAGEMENT PERSONNEL REMUNERATION

2020

2019

$'000

$'000

5.1 KEY MANAGEMENT PERSONNEL REMUNERATION

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of ASIO, directly or indirectly. ASIO has determined key management personnel to be the Director-General and members of the Executive Committee.

Short-term employee benefits

2183

1975

Long-term employee benefits

68

265

Termination benefits

301

0

Post-employment benefits

339

334

Total key management personnel remuneration expenses5

2891

2574

The number of key management positions as at 30 June is 6 (2019:5). The membership of the executive Committee changed throughout 2019-20. Several key management positions were occupied by different officers for portions of the year

5 The above key management personnel remuneration excludes the remuneration and other benefits of the:

  • portfolio ministers whose remuneration and other benefits are set by the Remuneration Tribunal and are not paid by ASIO; and
  • external member of ASIOʼs Executive Committee (1 Jul 19 – 28 May 20), who is an executive of another Australian Government entity. No remuneration or other benefits were paid by ASIO.

5.2 RELATED PARTY DISCLOSURES

Related party relationships

ASIO is an Australian Government-controlled entity. ASIOʼs related parties are key management personnel including the portfolio ministers and Executive Committee, and other Australian Government entities.

Transactions with key management personnel

Given the breadth of government activities, key management personnel and their associates 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 are not disclosed in this note.

All related party transactions with key management personnel during 2019–20 were in the ordinary course of business and do not require separate disclosure.

Transactions with other Australian government entities

ASIO transacts with Commonwealth Government entities at armʼs length for the provision of goods and services in the normal course of business. These transactions are not disclosed in this note.

ASIO has a significant relationship with the Department of Finance as lessor of the organisation’s headquarters in Canberra. Lease expenses were $23.430 million in 2019–20.

5.3 MAJOR BUDGET VARIANCES

The following provides an explanation of variances between the original budget as presented in the 2019–20 Portfolio Budget Statements (PBS) and the 2019–20 final actual result. The budget is not audited. Explanations are provided for major budget variances only. Variances are treated as major when it is considered important for the reader’s understanding or is relevant to an assessment of the discharge of accountability and to an analysis of ASIO’s performance.

The nature and timing of the Commonwealth’s budget process can also contribute to the variances. ASIO’s major budget impacts include:

  • estimated actual outcomes were published in the 2019–20 PBS before the closing 2018–19 and opening 2019–20 statement of financial position was known. Therefore, the opening balances of the statement of financial position were estimates.
  • the original budget as presented in the 2019–20 PBS is amended by Government throughout the year. ASIO’s budget for 2019–20 was updated as part of the 2019–20 Mid-Year Economic Fiscal Outlook (MYEFO).

Other considerable events during 2019–20 not factored into the budget figures which have significantly impacted the 2019–20 results are:

  • implementation on 1 July 2019 of the new accounting standard AASB 16 Leases which changed the financial accounting for leases. The standard requires the recognition of right-of-use assets and lease liabilities in relation to leases of office space, equipment and motor vehicles, which had previously been classified as operating leases. The adoption of AASB 16 impacted non-financial assets, liabilities, supplier expenditure and depreciation. Refer Overview for further details of accounting treatment. Required adjustments were unknown during development of the original budget; and
  • the spread of the novel coronavirus disease (COVID-19) has caused major disruption to economic activity. The considerable uncertainty and travel restrictions have contributed to underspends in some expense categories that could not have been predicted during development of the 2019–20 budget.

Expenses

The total variance between actual expenses and the original budget is an increase of $7.927 million (1%), but comprises variances between expense categories:

  • employee benefits were $11.246 million higher than original budget due to redundancy payments made or provided for at balance date;
  • supplier expenses were $59.610 million lower than original budget mainly as a result of the adoption of AASB 16 ($40.243 million). Additionally, other expense items were lower than budget as a result of COVID-19 restrictions; and
  • depreciation and amortisation expenses were $47.179 million higher than original budget primarily due to the recognition of right-of-use assets and associated depreciation in compliance with AASB 16 ($46.826 million).

Income

Income is $9.781 million (2%) higher than original budget. The increase is due to:

  • an increase of $9.376 million in appropriation funding as a result of new Government decisions;
  • an increase in other revenue of $4.369 million relating to rental income which was unknown at the time of budget preparation; and
  • revenue from the sale of services was $3.880 million less than budget. This budget is dependent on requests and activities undertaken by external parties which was less than anticipated, in part as a result of COVID-19 restrictions.

Assets

Total assets are $650.366 million higher (141%) than original budget. Financial assets are $38.538 million higher than budget, in part due to the difference between the actual and budgeted opening balances. The largest variance is within appropriation receivable which includes undrawn appropriation as a result of reduced expenditure relating to COVID-19 restrictions. These funds form part of the receivables balance and will be available in 2020–21.

Non-financial assets are $611.828 million higher than original budget mainly as a result of the implementation of AASB 16 and the capitalisation of right-of-use assets for office space, equipment and motor vehicles ($605.757 million).

Liabilities

Total liabilities are $631.025 million higher (554%) than original budget. The increase is attributed to:

  • the recognition of lease liabilities on implementation of AASB 16 ($618.532 million); and
  • an increase of $14.824 million in employee provisions primarily due to the decrease in the Government bond rate which is a component of the discount rate used to estimate the provisionʼs net present value. A reduction in uptake of leave during the COVID-19 restrictions also contributed to the higher than expected final actual balance.

Statement of changes in equity

Total equity is over budget by $19.341 million. The increase primarily relates to the revaluation of non-financial assets which resulted in a $20.516 million increase to the fair value of non-financial assets. The remaining increase relates to equity injections as a result of new Government decisions

Statement of cash flows

The amounts reported in the statement of cash flows are interrelated with figures disclosed in the statement of comprehensive income and statement of financial position. Consequently, cash flow variances are attributable to the relevant variance explanations provided above.