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2. Financial position

2.1 FINANCIAL ASSETS

FINANCIAL ASSETS

2020

2019

$'000

$'000

2.1 FINANCIAL ASSETS

2.1.A Cash and cash equivalents

16260

23517

Accounting policy

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

  • cash on hand; and
  • demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

2.1.B Trade and other receivables

Goods and services

3639

4543

Appropriation receivable

102018

77623

GST receivable

4372

3728

Total trade and other receivables

110029

85894

All receivables are expected to be recovered in no more than 12 months.

Credit terms for goods and services were within 30 days (2019: 30 days).

Financial assets were assessed for impairment at 30 June 2020. No indicators of impairment have been identified.

Accounting policy

Trade and other receivables are:

  • held for the purpose of collecting contractual cash flows where the cash flows are solely payments of principal and interest and not provided at below-market interest rates;
  • adjusted on initial measurement for expected credit losses; and
  • subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

2.1.C Amortisation of subleased right-of-use assets income2

1441

0

2 ASIO 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. The comparative amount includes amortisation of rent expense for ASIOʼs leases as lessee. These leases are now accounted for under AASB 16.

2.2 NON-FINANCIAL ASSETS

2.2.A Reconciliation of property, plant, equipment and computer software

RECONCILIATION OF PROPERTY, PLANT, EQUIPMENT AND COMPUTER SOFTWARE

Buildings

Buildings - leasehold improvement

Property plant equipment & computer software

Total

$'000

$'000

$'000

$'000

As at 1 July 2019

Gross book value

6692

160024

371776

538492

Accumulated depreciation, amortisation and impairment

-437

-20414

-177581

-198432

Net book value 1 July 2019

6255

139610

194195

340060

Recognition of right-of-use assets on initial application of AASB 16

636018

0

16469

652487

Total 1 July 2019

642273

139610

210664

992547

Additions by purchase

893

1663

66034

68590

Additions-internally developed

0

0

10363

10363

Revaluations recognised in other comprehensive income

304

14303

5909

20516

Depreciation and amortisation

-400

-15858

-76025

-92283

Disposal-other

0

-2169

-866

-3035

Right-of-use assets additions

0

0

97

97

Right-of-use assets depreciation

-44391

0

-2435

-46826

Net book value 30 June 2020

598679

137549

213741

949969

Gross book value

643149

140715

375026

1158890

Accumulated depreciation, amortisation and impairment

-44470

-3166

-161285

-208921

Net book value 30 June 2020

598679

137549

213741

949969

Carrying amount of right-of-use assets

591627

0

14131

605758

Impairment

Non-financial assets are assessed for impairment at the end of each reporting period. There are no indicators of impairment for property, plant, equipment and computer software. Any reduction in assetsʼ carrying value due to impairment throughout the year has been accounted for in the statement of comprehensive income.

Sale or disposal

Property, plant, equipment and computer software of an immaterial value only is expected to be sold or disposed of within the next 12 months. No buildings are expected to be sold or disposed of within the next 12 months.

Contractual commitments for the acquisition of property, plant, equipment and computer software

Within 1 year

0

1

5505

5506

Between 1 to 5 years

0

0

136

136

Total capital commitments

0

1

5641

5642

Accounting policy

Acquisition of assets

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.

Purchases of non-financial assets are initially recognised at cost in the statement of financial position, except for purchases costing less than $4000, 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).

Property, plant, equipment and computer software (excluding right-of-use assets)

Following initial recognition at cost, property, plant and equipment is 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.

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to ASIO using, in all cases, the straight-line method of depreciation. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date. Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

2020

Buildings on freehold land

8-60 years

Leasehold improvements

lease term

Plant and equipment

2-25 years

All assets were assessed for impairment at 30 June 2020. 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.

An asset is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

ASIO’s software comprises purchased and internally developed software for internal use. These assets 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 life of ASIOʼs software is 1–10 years (2019: 1–10 years).

Lease right-of-use assets

Lease right-of-use assets are capitalised at the commencement date of the lease and comprise the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are disclosed by Commonwealth lessees as separate asset classes, and presented with corresponding assets according to the nature of the lease.

Fair value measurement

ASIOʼs assets are held for operational purposes and not held for the purpose of deriving a profit. The current use of all non-financial assets is considered their highest and best use.

Comprehensive valuations are carried out at least once every three years. ASIO engaged the services of Jones Lang LaSalle (JLL) to conduct a comprehensive valuation of carrying amounts for all non-financial assets (excluding software and lease right-of-use assets) as at 30 April 2020. JLL has provided written assurance to ASIO that the models developed are in compliance with AASB 13 Fair Value Measurement.

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 Current Replacement Cost approach. Under the Current Replacement Cost approach, the estimated cost to replace the asset is calculated and then adjusted to take into account 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.

Assets classified in a particular level input in the current financial reporting period may be reclassified into a different level in subsequent periods as identified during the revaluation process.

The fair values of ASIO’s assets at 30 June 2020 are detailed above in Note 2.2.A.

2.3 PAYABLES

PAYABLES

2020

2019

$’000

$’000

2.3 PAYABLES

2.3.A Suppliers

Trade creditors and accruals

9991

9373

Total suppliers

9991

9373

Settlement is usually made within 30 days.

2.3.B Other payables

Salaries

5415

1669

Superannuation

554

275

Termination benefits

3794

185

Unearned income

435

1119

Lease incentives

0

490

Fringe benefits tax

2222

1630

Amortisation of rent expense

0

21 269

Total other payables

12 420

26 637

2.4 INTEREST BEARING LIABILITIES

2.4.A Interest bearing liabilities

Lease liabilities—buildings

604 165

0

Lease liabilities—property, plant, equipment and computer software

14 367

0

Total interest bearing liabilities

618 532

0

ASIO has applied AASB 16 using the modified retrospective approach and therefore there is no comparative information.

Total cash outflow for leases for the year ended 30 June 2020 was $40.243 million.

2.5 PROVISIONS

2.5.A Employee provisions

Leave

95 063

91 336

Termination benefits

1482

0

Total employee provisions

96 545

91 336

Accounting judgements and estimates

Leave provisions involve assumptions based on the expected tenure of existing staff, patterns of leave claims and payouts, future salary movements and future discount rates.

Accounting policy

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits expected within 12 months of the end of the reporting period are measured at nominal amounts.

The liability for employee entitlements 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 ASIO is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employeesʼ remuneration at the estimated salary rates that will apply at the time the leave is taken, including ASIOʼs 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 leave has been determined by reference to the work of an actuary as at May 2020. The estimate of present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Staff of ASIO are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other complying superannuation funds.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and other complying funds are defined contribution schemes.

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 Financeʼs administered schedules and notes.

ASIO makes employer contributions to employeesʼ superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government. ASIO accounts for the contributions as if they were contributions to defined contribution plans.

Superannuation payable as at 30 June represents outstanding contributions for the final fortnight of the year.

2020

2019

$’000

$’000

2.5.B Restoration obligations

7225

6794

Carrying amount 1 July

6794

0

Additional provisions made

157

0

Reduction in value

0

-17

Unwinding of discount or change in discount rate

274

739

Closing balance

7225

6794

ASIO has a number of agreements for the leasing of premises which contain provisions requiring restoration of the premises to original condition at the conclusion of the lease. ASIO has made a provision to reflect the present value of this obligation