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:

a) Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and

b) 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 results or the financial position. The financial statements are presented in Australian dollars.

New Accounting Standards
All new standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect on the entity’s financial statements.

Taxation
The Bureau of Meteorology is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

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

Departmental
There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the Bureau of Meteorology.

Administered
There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the Bureau of Meteorology.

Financial Performance

This section analyses the financial performance of the Bureau of Meteorology for the year ended 2019.

1.1 Expenses

Accounting Policy
Accounting policies for employee related expenses is contained in the People and Relationships section (note 5.1).

Leasing commitments
The Bureau of Meteorology in its capacity as lessee enters into operating leases for Office Accommodation, Observation Sites and Motor Vehicles.

Accommodation lease payments are subject to increases in accordance with terms as negotiated under the lease.

The periods of office accommodation leases are able to be renewed at the Bureau of Meteorology’s discretion as allowed under the lease terms.

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.

1.2 Own-Source Revenue

Accounting Policy
Revenue from the sale of goods is recognised when:

a) the risks and rewards of ownership have been transferred to the buyer;
b) the Bureau of Meteorology retains no managerial involvement or effective control over the goods.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

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 each month end.

Allowances are made when the collectability of the debt is no longer probable.

Accounting Policy

Resources Received Free of Charge

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.

Accounting Policy
Revenue from Government
Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the Bureau of Meteorology 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.

Financial Position

This section analyses the Bureau of Meteorology’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.

Accounting Policy
Financial assets
Trade receivables, loans and other 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 classified as subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

Loans and Receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. The Bureau of Meteorology’s loans and receivables are measured at their nominal amount less impairment.

Impairment of Financial Assets
Financial assets are assessed for impairment at the end of each reporting period.

AASB 9 Financial Instruments is effective for annual periods beginning on or after 1 January 2018. The Bureau of Meteorology adopted this standard for the first time during the financial year ending 30 June 2019. The Bureau has determined that there is no material impact on recognition of financial instruments. The comparative period has been restated.

2.2 Non-Financial Assets

2.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles

Accounting Policy
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 plus transaction costs where appropriate.

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 costing less than $2,000 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 ‘make good’ provisions in property leases taken up by the Bureau of Meteorology where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Bureau of Meteorology’s leasehold improvements and relevant assets with a corresponding liability
recognised as a provision for ‘make good’ (Note 2.4).

Revaluations
Following initial recognition at cost, land, buildings, 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 differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for
the relevant assets. Currently revaluations are done on a class basis every three years.

The Bureau of Meteorology undertook a review of three of its asset classes (land, buildings, and property, plant and equipment) during the 2016-17 financial year. Any revaluation increment was credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets were recognised
directly in the surplus/deficit except to the extent that they reversed a previous revaluation increment for that class. Any accumulated depreciation as at the revaluation date was eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

During the 2018-19 financial year, the Bureau of Meteorology engaged the services of a qualified valuer (James Munroe from AON Risk Services Australia Limited) for the purpose of asset materiality review in accordance with AASB 116. No material movement on fair value was identified from the independent review.

Depreciation
Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Bureau of Meteorology 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. Leased assets are amortised over the period of the lease.

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:

Impairment
All asset classes 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.
The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows and the asset would be replaced if the Bureau of Meteorology were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

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 Bureau of Meteorology’s intangibles comprise software licences, purchased software, and internally developed software. The software is 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 lives of the Bureau of Meteorology’s software is predominately 3 to 5 years other than the Services System software which has a useful life of 20 years (2018: 3-5 years and 20 years, respectively).

Heritage and Cultural Assets
During the 2018 financial year, the Bureau of Meteorology undertook a valuation of its Library Collection. The result of this valuation saw the collection recorded between a new Heritage class of assets and Plant & Equipment. The Heritage assets are non-depreciating. That part of the collection that is to be depreciated is included within a separate category of plant and equipment.

Assets not recognised
Historical meteorological data has not been recognised as an asset due to difficulties in the application of control criteria.

For historical meteorological data to be recognised as an asset the following criteria need to be met:

• the weather data must generate future economic benefits;
• the cost of collecting and maintaining the data can be reliably measured;
• the data can be separately identifiable as an asset; and
• the Bureau of Meteorology maintains control of the data.

The Bureau of Meteorology provides meteorological data to the public at no cost. From this point the Bureau of Meteorology has no control over and cannot regulate the information. Based on the above criterion, control of the asset is not met. For this reason the Bureau of Meteorology does not recognise historical meteorological data as an asset.

Accounting Judgements and Estimates
The fair value of land and buildings has been taken to be the market value of similar properties as determined by an independent valuer.

Accounting Policy
Inventories held for distribution are valued at cost; costs have been assigned to inventory quantities on hand at balance date using the average cost basis.

The Bureau of Meteorology’s inventory holding consists of Publications held for sale and items utilised in the installation of sites, or the repair/maintenance of its equipment.

The inventory is held to ensure that repairs/maintenance can be made at short notice to keep the operational equipment in service. The range of inventory held consists of items which can be utilised across a significant part of the operational network and as such is not limited to a specific piece of equipment. When items of inventory are sold or utilised to make repairs/maintenance to equipment, the carrying amount of the items are recognised as an expense.

Items held for the purposes of major spare parts or as stand-by equipment are classified in the Bureau of Meteorology’s accounts and records as Property, Plant and Equipment in accordance with AASB 116, consistent with the Bureau of Meteorology Asset Management Policy.

2.3 Payables

Accounting Policy
Financial Liabilities
The Bureau of Meteorology classifies its financial liabilities which includes supplier and other payables as ‘other financial liabilities’. Supplier 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 derecognised upon payment.

2.4 Provisions for Restorations

Accounting Judgements and Estimates
Make Good
A provision for restoration obligation (make good) is recognised if, as a result of a past event, the Bureau of Meteorology has a present obligation (legal or constructive) that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Make good provisions are measured at the best estimate of the expenditure required to settle the present obligation at reporting date, including the risks and uncertainties specific
to the liabilities.

Make good provisions are discounted to present value when the time value of money is material.

Provisions are reviewed annually and adjusted to reflect the current best estimate.

Assets and Liabilities Administered on Behalf of Government

This section analyses assets used to conduct operations and the operating liabilities incurred. The Bureau of Meteorology 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.

Accounting Policy
Where receivables are not subject to concessional treatment, they are carried at amortised cost using the effective interest method. Gains and losses due to impairment, derecognition and amortisation are recognised through profit and loss.

Funding

This section identifies the Bureau of Meteorology’s funding structure.

4.1 Appropriations

4.2 Special Accounts

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.

5.1 Employee Provisions

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 reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any), out of which the obligations are to be settled directly.

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 Bureau of Meteorology is estimated to be equal or 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 leave is taken, including the Bureau of Meteorology’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 liabilities for annual leave and long service leave have been determined by reference to the work of an actuary as at 30 June 2019. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. The Bureau of Meteorology recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

Staff of the Bureau of Meteorology are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) and 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 Bureau of Meteorology makes employer contributions to the employees’ superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The Bureau of Meteorology accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June 2019 represents outstanding contributions.

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 Bureau of Meteorology, directly or indirectly, including any director (whether executive or otherwise) of the Bureau of Meteorology. The Bureau of Meteorology has determined the key management personnel to be the Cabinet Ministers, Director/Chief Executive Officer and Group Executives. Key management personnel remuneration is reported in the table below:

5.3 Related Party Disclosures

Related party relationships:

The Bureau of Meteorology is an Australian Government controlled entity. Related parties to the Bureau of Meteorology are Key Management Personnel including close family members of key management personnel, entities controlled by key management personnel, the Cabinet Ministers 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.

Significant transactions with related parties can include:

• the payments of grants or loans;
• purchases of goods and services;
• asset purchases, sales, transfers or leases;
• debts forgiven; and
• guarantees.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the Bureau of Meteorology, it has been determined that there are no related party transactions to be separately disclosed.

Managing Uncertainties

This section analyses how the Bureau of Meteorology manages financial risks within its operating environment.

6.1 Contingent Assets and Liabilities

Quantifiable Contingencies

The Bureau of Meteorology has a number of claims with Comcover in respect of property damage. Claims to the value of $358,000 (2018: $424,000) have been lodged with Comcover for assessment. These consist of the loss of equipment relating to the Coral Sea Tsunameter Surface Buoy.

The estimate is based on information provided by Bureau staff to the Comcover assessor. The Bureau of Meteorology had no quantifiable contingent liabilities in 2018-19 (2018: Nil).

Unquantifiable Contingencies

The Bureau has an unquantifiable contingency that will give rise to a liability in the future in relation to past accommodation arrangements. At this stage specifics are unknown (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.

The Bureau of Meteorology does not have any administered contingent liabilities or assets to report (2018: Nil).

6.2 Financial Instruments

Classification of financial assets on the date of initial application of AASB 9

Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, the entity classifies its financial assets in the following categories:

1. financial assets at fair value through profit or loss;
2. financial assets at fair value through other comprehensive income; and
3. financial assets measured at amortised cost.

The classification depends on both the entity’s business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity 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

Financial assets included in this category 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 (SPPI) on the principal outstanding amount. Amortised cost is determined using the effective interest method.

Effective Interest Method

Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost.

Financial Assets at Fair Value Through Other Comprehensive Income (FVOCI)

Financial assets measured at fair value through other comprehensive income are held with the objective of both collecting contractual cash flows and selling the financial assets and the cash flows meet the SPPI test.

Any gains or losses as a result of fair value measurement or the recognition of an impairment loss allowance is recognised in other comprehensive income.

Financial Assets at Fair Value Through Profit or Loss (FVTPL)

Financial assets are classified as financial assets at fair value through profit or loss where the financial assets either doesn’t meet the criteria of financial assets held at amortised cost or at FVOCI (i.e. mandatorily held at FVTPL) or may be designated.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

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

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Financial Liabilities at Amortised Cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Supplier 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).

6.2C: Net Gains or Losses on Financial Liabilities

There are no gains or losses from financial liabilities not at fair value through the profit or loss in the year ending 2019 (2018: Nil)

6.3 Administered – Financial Instruments

Classification of financial assets on the date of initial application of AASB 9

Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9

Other Information

7.1 Budget Variances Commentary

The variance explanations below relate to the movements between budgeted information for the Bureau of Meteorology published in the 2018-19 Portfolio Budget Statements (PBS) and actual amounts presented in the Bureau of Meteorology’s financial statements.

As a guide, variances are considered to be ‘major’ based on the following criteria:

• the variance between budget and actual is greater than 10%; and
• the variance between budget and actual is greater than 2% of the relevant category (Income, Expense and Equity totals); or
• an item below this threshold but is considered important for the reader’s understanding or is relevant to an assessment of the discharge of accountability and to an analysis of performance of the Bureau of Meteorology.

An explanation for a major variance may not be provided where the item is considered immaterial in the overall context of the financial statements.

Statement of Comprehensive Income for Bureau of Meteorology

Employee benefits

Factors contributing to the variance in employee expenses include the movement in the employee entitlement provision directly relating to the annual actuary assessment of staff entitlements, restructuring costs as the Bureau continues to align itself to its new organisational model and costs associated with increased external revenue generating activities.

Depreciation and amortisation expense

The variance relates to the impact of recent New Policy Proposals combined with a general increase in capital spending over the last few years and an adjustment to Asset lives to recognise a standard asset life for asset categories. The Bureau applied for and received additional funding ($14.6 million) in the Portfolio Additional Estimates Statements (PAES) Budget update in late 2018.

Write down and impairment of assets

The variance relates to a review of the provision for obsolete assets resulting in a reduction in the overall provision.

Contributions to WMO and IOC

Bureau contributions to the WMO have, over the past few years, been impacted by a higher contribution rate applied to the Australian government subscription and the impact of the movement in Swiss Franc exchange rate.

Sale of Goods and Rendering of Services

Variance reflects an increase in the number and value of externally generated project activities.

Revenue from Government

Variance reflects additional appropriation received during the PAES Budget update for a New Policy Proposal (NPP) related to Assistance for Farmers and Farm communities in drought.

Statement of Financial Position for Bureau of Meteorology

Cash and cash equivalents

Budget reflects expected funds from Bureau asset sales, with the actual funds received have been returned to Government. The Bureau Budget was adjusted at PAES to reflect the return of funds to Government.

Trade and other receivables

Variance reflects lower than budgeted spending associated with activities funded through Government Equity funding and higher than expected s74 receipts. The Bureau Budget assumes all funds received during the year will be consumed. Applications for Movement of Funds (MoF) associated with projects funded through Equity were approved through the 2018-19 financial year and are reflected in later Budget updates.

Non-financial assets

Overall the NFA variance is 15% under budget. The variance reflects underspends associated with Equity projects for which Movement of Funds applications have been approved (refer to trade and other receivable comments) and higher depreciation for the year (refer to depreciation comments on the Statement of Comprehensive Income).

Suppliers

Variances associated with the timing of payments to vendors.

Other payables and liabilities

Variance mainly reflects a higher deferred revenue balance due to increased s74 receipts during the financial year

principally associated with new s74 project activity.

Contributed equity

Variance relates to an approved Movement of Funds application reflected in later budget updates.

Cash Flow Statement for Bureau of Meteorology

Appropriations

Variance reflects growth in externally generated expenditure associated with project activities, a large number of vendor payments in July 2018, staff separations including redundancies and asset purchases.

Employees

Variance is due to payments for separations and restructuring costs associated with staff separations from the Bureau during the 2018-19 financial year.

Suppliers

Variance reflects large number of vendor payments early in the financial year associated with equipment purchases and other supplier costs accrued during the 2017-18 year and additional expense associated with the increase in externally generated project activity.

Section 74 receipts transferred to OPA

Variance relates to receipts received associated with externally generated project activities, budget did not reflect an increase in the funds transferred to the OPA for increased s74 activities for the year.

Purchase of property, plant and equipment and intangibles

Variance reflects an underspend in NPP equity projects for the year due to changes in the timing of project activities, the spending is now anticipated during the 2019-20 and later financial years.

Cash received from financing activities

Variance reflects an underspend in NPP equity projects for the year due to changes in the timing of project activities, the spending is now anticipated during the 2019-20 financial year and later financial years.

7.2 Assets Held in Trust

To enable the Bureau of Meteorology to hold and expend amounts on behalf of persons or entities other than the Commonwealth.

7.3 Aggregate Assets and Liabilities