Go to top of page

Financial statements

The Clean Energy Regulator received an unqualified audit report from the Australian National Audit Office for our 2018–19 financial statements.

The Clean Energy Regulator’s 2018–19 Financial statements start on the page following the independent auditor’s report and statement by the Accountable Authority and Chief Financial Officer.

Independent auditor's report

 Statement by the Accountable Authority and Chief Financial Officer; Statement of Comprehensive Income; Statement of Financial Position; Statement of Changes in Equity; Cash Flow Statement; Administered Schedule of Comprehensive Income; Administered Schedule of Assets and Liabilities; Administered Reconciliation Schedule; Administered Cash Flow Statement; and Notes to the financial statements, comprising a Summary of Significant Accounting Policies and other explanatory information. Basis for opinion I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Entity in accordance with the relevant ethical requirements for financial statement audits conducted by the Auditor-General and his delegates. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) to the extent that they are not in conflict with the Auditor-General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Accountable Authority’s responsibility for the financial statements As the Accountable Authority of the Entity, the Chair is responsible under the Public Governance, Performance and Accountability Act 2013 (the Act) for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards – Reduced Disclosure Requirements and the rules made under the Act. The Chair is also responsible for such internal control as the Chair determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Chair is responsible for assessing the ability of the Entity to continue as a going concern, taking into account whether the Entity’s operations will cease as a result of an administrative restructure or for any other reason. The Chair is also responsible for disclosing, as applicable, matters related to

 27 September 2019

Statement by the Accountable Authority and Chief Financial Officer

 27 September 2019

Statement of Comprehensive Income

For the period ended 30 June 2019

2019

2018

Original Budget

Notes

$'000

$'000

$'000

NET COST OF SERVICES

Expenses

Employee Benefits

1.1A

40,205

38,764

39,088

Suppliers

1.1B

30,230

29,586

31,176

Depreciation and amortisation

3.2A

5,806

9,128

6,704

Impairment Loss Allowance on Financial Instruments

3.1C

19

-

-

Write-Down and Impairment of Other Assets

-

14

-

Total expenses

76,260

77,492

76,968

Own-Source Income

Own-source revenue

Rendering of Services

19

35

-

Other Revenue

1.2A

967

519

-

Total own-source revenue

986

554

-

Gains

Other Gains

-

229

385

Total gains

-

229

385

Total own-source income

986

783

385

Net cost of services

(75,274)

(76,709)

(76,583)

Revenue from Government

1.2B

69,879

69,969

69,879

Deficit on continuing operations and total comprehensive loss

(5,395)

(6,740)

(6,704)

The above statement should be read in conjunction with the accompanying notes.

Statement of Financial Position

As at 30 June 2019

2019

2018

Original Budget

Notes

$’000

$’000

$’000

ASSETS

Financial assets

Cash and Cash Equivalents

3.1A

558

117

345

Trade and Other Receivables

3.1B

19,592

20,732

23,061

Accrued Revenue

-

129

10

Total financial assets

20,150

20,978

23,416

Non-financial assets

Leasehold improvement

3.2A

3,272

4,393

3,272

Plant and equipment

3.2A

634

822

279

Intangibles

3.2A

5,821

8,241

3,822

Prepayments

1,343

1,189

850

Total non-financial assets

11,070

14,645

8,223

Total assets

31,220

35,623

31,639

LIABILITIES

Payables

Suppliers

3.3A

3,928

4,687

3,947

Other Payables

3.3B

2,381

2,927

653

Total payables

6,309

7,614

4,600

Provisions

Employee Provisions

6.1A

11,099

9,963

11,809

Total provisions

11,099

9,963

11,809

Total liabilities

17,408

17,577

16,409

Net assets

13,812

18,046

15,230

EQUITY

Contributed equity

82,288

81,127

87,386

Reserves

9,623

9,623

9,622

Retained accumulated deficit

(78,099)

(72,704)

(81,778)

Total equity

13,812

18,046

15,230

The above statement should be read in conjunction with the accompanying notes.

Statement of Changes in Equity

For the period ended 30 June 2019

Retained Deficit

Asset Revaluation Surplus

Contributed Equity

Total Equity

Original Budget

Original Budget

Original Budget

2019

2018

2019

2019

2018

2019

2019

2018

2019

2019

2018

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Opening balance

(72,704)

(65,964)

(75,074)

9,623

9,623

9,622

81,127

85,058

86,225

18,046

28,717

Equity adjustment*

-

-

-

-

-

-

-

(5,098)

-

-

(5,098)

Adjusted opening balance

(72,704)

(65,964)

(75,074)

9,623

9,623

9,622

81,127

79,960

86,225

18,046

23,619

Comprehensive income

Deficit for the period

(5,395)

(6,740)

(6,704)

-

-

-

-

-

-

(5,395)

(6,740)

Total comprehensive income

(5,395)

(6,740)

(6,704)

-

-

-

-

-

-

(5,395)

(6,740)

Transactions with owners

Contributions by owners

Departmental capital budget

-

-

-

-

-

-

1,161

1,167

1,161

1,161

1,167

Total transactions with owners

-

-

-

-

-

-

1,161

1,167

1,161

1,161

1167

Closing balance as at 30 June

(78,099)

(72,704)

(81,778)

9,623

9,623

9,622

82,288

81,127

87,386

13,812

18,046

The above statement should be read in conjunction with the accompanying notes.

*Apropriation Act (No. 2) 2012-13 appropriation of $5.098m was repealed in Schedule 3 of Appropriation Bill (No.4) 2017-2018. This appropriation was part of the opening balance of 2017–18. The CER has no legal control of this appropriation and removed it from the available appropriations in 2017-18.

Accounting Policy

Equity Injections

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets are recognised directly in contributed equity in that year.

Cash Flow Statement

For the period ended 30 June 2019

2019

2018

Original Budget

$’000

$’000

$’000

OPERATING ACTIVITIES

Cash received

Appropriations

72,431

66,490

69,224

Rendering of services

19

181

-

Other revenue

738

-

-

Net GST received

3,004

3,220

-

Total cash received

76,192

69,891

69,224

Cash used

Employees

38,976

39,972

38,487

Suppliers

34,276

28,909

30,737

GST paid

225

154

-

Section 74 receipts transferred to OPA

1,189

738

-

Total cash used

74,666

69,773

69,224

Net cash from operating activities

1,526

118

-

INVESTING ACTIVITIES

Cash received

Proceeds from sales of property, plant and equipment

-

24

-

Total cash received

-

24

-

Cash used

Purchase of property, plant and equipment and intangibles

2,246

1,537

1,161

Total cash used

2,246

1,537

1,161

Net cash used by investing activities

(2,246)

(1,513)

(1,161)

FINANCING ACTIVITIES

Cash received

Contributed equity

1,161

1,167

1,161

Total cash received

1,161

1,167

1,161

Net cash from financing activities

1,161

1,167

1,161

Net increase/(decrease) in cash held

441

(228)

-

Cash and cash equivalents at the beginning of the reporting period

117

345

345

Cash and cash equivalents at the end of the reporting period*

558

117

345

*As shown in the Statement of Financial Position.

The above statement should be read in conjunction with the accompanying notes.

Budget Variances Commentary

For the period ended 30 June 2019

The Clean Energy Regulator (CER) has disclosed major departmental variances against budget where the variance is greater than 10 per cent and $0.250 million of an individual line item.

Statement of Comprehensive Income

Expenses: Depreciation and amortisation expense

Depreciation and amortisation expense is lower than budget due to a number of intangible assets currently under development but yet to be moved to production for use and not yet incurring an amortisation expense.

Revenue: Own-Source Income

The CER receives resources free of charge from the Australian National Audit Office. This item was budgeted against other gains however the actual amount is disclosed in the financial statements as own-source revenue – other revenue. The CER also received revenue under an agreement with the Department of the Environment and Energy to provide inspection services under the solar power validation program as well as funding from the Department of the Prime Minister and Cabinet under the Data Integration Partnership initiative. This revenue was not included in the budgeted amount as it was not known at the time of preparation.

Statement of Financial Position

Assets: Trade and other receivables

Trade and other receivables are under budget by $3.469 million mainly due to differences between the actual and budgeted opening balances for appropriation receivable.

Assets: Plant and equipment

The closing position for plant and equipment was more than the budgeted amount due to the purchase of IT hardware including switches, servers and laptops that had been initially planned for purchase in a later year.

Assets: Intangibles

The value of CER's intangibles in 2018-19 was more than the budgeted amount due to the recognition of additional amounts of assets under construction in relation to the ongoing enhancements of the REC Registry and Australian National Registry of Emissions Units (ANREU) systems. In addition a number of intangibles had adjustments made to asset useful lives that were not able to be reflected in the 2018-19 budget due to timing.

Assets: Prepayments

Prepayments are more than budget due to a difference between estimated and actual timing of the prepayments at 30 June 2019.

Liabilities: Suppliers payable & other payables

The CER recognises payables and accrued expenditure at the end of the year for work performed but not yet paid (including salaries). The value of these liabilities change from time to time in the normal course of business.

Cash Flow Statement

Operating activities: cash received – Rendering of services and other revenue; cash used – Section 74 receipts transferred to Official Public Account

The budget was prepared net of section 74 receipts as these are highly unpredictable and relate to leave liability transfers and other minor revenues.

Operating activities: cash received – Net GST received

The budget was prepared net of GST whereas the financial statement numbers are GST inclusive.

Operating activities: cash used – Suppliers

The budget was prepared net of GST where the financial statement numbers are GST inclusive.

Investing activities: cash used – purchase of property, plant and equipment and intangibles

The CER budgeted for an increase in intangibles consistent with its known Departmental Capital Budget. However, during the year the CER recognised additional amounts of plant and equipment and assets under construction in relation to the development of key business systems. Please refer to commentary above on Assets: Intangibles and Assets: Plant and equipment.

Administered schedule of comprehensive income

For the period ended 30 June 2019

2019

2018

Original Budget

Notes

$’000

$’000

$’000

NET COST OF SERVICES

Expenses

Suppliers

3,719

3,773

4,147

Purchase of Australian Carbon Credit Units

2.1A

158,498

144,854

201,608

RET Refunds

2.1B

273,434

47,867

-

Remission of Prior Year Carbon Pricing Mechanism

Surplus Surrender

29

61

-

Impairment Loss Allowance on Financial Instrument

433

-

-

Total expenses

436,113

196,555

205,755

Income

Revenue

Taxation revenue

Other taxes (RET Shortfall Charges and Interest)

2.2A

219,927

88,792

660

Total taxation revenue

219,927

88,792

660

Non-taxation revenue

Fees and Fines

2.2B

20,390

16,039

14,341

Total non-taxation revenue

20,390

16,039

14,341

Total revenue

240,317

104,831

15,001

Total income

240,317

104,831

15,001

Net cost of services and comprehensive loss

(195,796)

(91,724)

(190,754)

The above schedule should be read in conjunction with the accompanying notes.

Administered schedule of assets and liabilities

As at 30 June 2019

2019

2018

Original Budget

Notes

$’000

$’000

$’000

ASSETS

Financial assets

Cash and Cash Equivalents

4.1A

144

1,129

757

Taxation Receivables

4.1B

152

6,108

3,197

Trade and Other Receivables

4.1C

34

874

8,052

Total financial assets

330

8,111

12,006

Total assets administered on behalf of Government

330

8,111

12,006

LIABILITIES

Payables

Suppliers

4.2A

201

831

417

Other Payables

4.2B

78,153

46,365

22,851

Total payables

78,354

47,196

23,268

Provisions

Other Provisions

4.3A

421,884

183,722

-

Total provisions

421,884

183,722

-

Total liabilities administered on behalf of Government

500,238

230,918

23,268

Net liabilities

(499,908)

(222,807)

(11,262)

The above schedule should be read in conjunction with the accompanying notes.

Administered reconciliation schedule

2019

2018

Notes

$’000

$’000

Opening assets less liabilities as at 1 July

(222,807)

(160,652)

Net cost of services

Income

240,317

104,831

Expenses

Payments to entities other than corporate Commonwealth entities

(436,113)

(196,555)

Transfers (to)/from the Australian Government

Appropriation transfers from Official Public Account

Annual appropriations

Payments to entities other than corporate Commonwealth entities

131,393

139,321

Special appropriations (unlimited)

Renewable Energy (Electricity) Act 2000, section 157 refunds

35,272

-

Refund of administered receipts - section 77 PGPA Act

186

1,473

Appropriation transfers to OPA

Transfers to OPA

(248,156)

(111,225)

Closing assets less liabilities as at 30 June

(499,908)

(222,807)

The above schedule should be read in conjunction with the accompanying notes.

Adjustments have been made to appropriation transfers from Official Public Account comparatives to reflect refunds made under section 77 of the PGPA Act.

Accounting Policy

Administered cash transfers to and from the Official Public Account

Revenue collected by the CER for use by the Government rather than the CER is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the CER on behalf of the Government and reported as such in the schedule of administered cash flows and in the administered reconciliation schedule.

Administered cash flow statement

For the period ended 30 June 2019

2019

2018

Notes

$’000

$’000

OPERATING ACTIVITIES

Cash received

Taxes (RET shortfall Charges)

225,449

86,571

Fees and Fines

21,245

17,591

Net GST received

396

5,263

Total cash received

247,090

109,425

Cash used

Suppliers

4,776

3,057

Purchase of Australian Carbon Credit Units

126,722

135,466

RET Refunds

35,272

-

Other

-

99

Total cash used

166,770

138,622

Net cash from/(used by) operating activities

80,320

(29,197)

Cash and cash equivalents at the beginning of the reporting period

1,129

757

Cash from Official Public Account

Appropriations

166,851

140,794

Total cash from official public account

166,851

140,794

Cash to Official Public Account

Appropriations

(248,156)

(111,225)

Total cash to official public account

(248,156)

(111,225)

Cash and cash equivalents at the end of the reporting period*

4.1A

144

1,129

*As shown in the Administered Schedule of Assets and Liabilities.

This schedule should be read in conjunction with the accompanying notes.

Budget Variances Commentary – Administered

For the period ended 30 June 2019

BUDGET VARIANCES COMMENTARY – ADMINISTERED

The CER has disclosed major administered variances against budget where the variance is greater than 10 per cent and $0.500 million of an individual line item.

Emissions Reduction Fund

The CER continued the delivery of the Emissions Reduction Fund (ERF) in 2018-19, including the completion of the eighth auction. The budget profile was updated during 2018-19 to better reflect the outcome of the auction results, with the purchase of Australian Carbon Credit Units (ACCUs) largely consistent with revised budget estimates.

Renewable Energy Target (RET)

During 2018-19 a number of entities paid a large-scale generation shortfall charge to meet their large-scale renewable energy target obligations rather than to surrender Renewable Energy Certificates. Entities can receive a refund of their shortfall payments if they meet certain requirements under the legislation within the ‘allowable refund period’. The CER has raised a provision for entities that may become entitled to a repayment of their shortfall payments, subject to satisfying legislative requirements.

Administered Schedule of Comprehensive Income

Expenses: Purchase of Australian Carbon Credit Units

The budget allocation reflects the best estimate for ACCU purchases at the time of preparation. This estimate is then subject to auction results and movement between years of existing contract deliverables (as allowed for in ERF contracts). The estimate has since been updated in line with the known pattern of commitments.

Expenses: RET Refunds

The CER has raised a provision and corresponding expense for entities that may become entitled to a repayment of their shortfall payments, subject to satisfying legislative requirements. The 2018-19 budget did not reflect this provision and corresponding expense.

Revenue: Other taxes (RET Shortfall Charges and Interest)

The budget assumes a low level of non-compliance with obligations to surrender Renewable Energy Certificates. In 2018-19 a large number of entities elected to pay a shortfall charge rather than surrender Renewable Energy Certificates.

Revenue: Fees and Fines

Renewable energy revenue is generated through the creation and surrender of renewable energy certificates when the underlying transaction occurs. The number of certificates created and surrendered exceeded the amount used in determining the budget.

Administered Schedule of Assets and Liabilities

Assets: Cash and cash equivalents

The CER operates the small-scale technology certificate clearing house to facilitate the purchase and sale of certificates between liable entities and individuals or agents installing small-scale solar, wind and hydro systems. The budget variance is predominantly due to the difference between the actual and budgeted opening balances for cash and cash equivalents.

Assets: Taxation receivables

The budget variance is due to timing differences between the actual and budgeted collection of outstanding debts.

Assets: Trade and other receivables

The budget variance is predominantly due to the difference between the actual and budgeted opening balances for trade and other receivables.

Liabilities: Other payables

The CER recognises ACCUs issued but not yet delivered and also those delivered but not yet settled as a liability at year end. In contrast, the budget estimate assumed settlement of all deliveries at year end.

Provisions: Other provisions

Refer Expenses: RET Refunds for explanation.

Notes to and forming part of 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:

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, revised, amending 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 CER’s financial statements.

Taxation

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

Significant Accounting Judgements and Estimates

The CER has made assumptions or estimates in the following areas that have the most significant impact on the amounts recorded in the financial statements:

  • Employee leave provisions involve assumptions based on the expected tenure of existing staff, pattern of leave claims and payouts, future salary movements and future discount rates; and
  • The fair value of plant and equipment is assessed at market value or depreciated replacement cost as determined by an independent valuer and is subject to management assessment in between formal valuations.

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.

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.

Administered significant accounting judgements and estimates

The CER has made assumptions or estimates in the following areas that have the most significant impact on the amounts recorded in the financial statements:

Emissions Reduction Fund (ERF)

The CER implemented the ERF in 2014-15 and has an accounting policy for ERF transactions with the following key elements:

  • the CER will recognise a liability under the ERF where it has a present obligation arising from a past event; and
  • the obligating event is on all Australian Carbon Credit Unit (ACCU) issuance. A liability and expense is recognised on the issuance of all ACCUs less the ACCUs surrendered under the safeguard and voluntary surrenders.

Following the introduction of the safeguard mechanism on 1 July 2016 the CER has continued to account for the ERF in line with this policy.

Provision for Renewable Energy Target Shortfall refunds

Under the Renewable Energy (Electricity) Act 2000 (REE Act) liable entities that pay a large-scale generation shortfall charge (LGC) may claim a refund for the shortfall charge less an administration fee. To qualify for a refund, liable entities must not have a large-scale generation shortfall in the year immediately before the year in which the refund is claimed, and surrender additional LGCs to cover all or part of the amount of certificate shortfall for which they initially paid the shortfall charge. The refund claim must be made during the allowable refund period (which ends three years after paying the shortfall charge). The CER has no alternative but to refund the shortfall charge, less an administration fee, if the conditions to pay a refund are met by the liability entity.

The CER records a provision for the refund of shortfall charges where it is satisfied that:

  • a present obligation exists for a refund to be made where a liable entity meets the requirements of the three-year rule as detailed in sections 95-97 of the REE Act;
  • it is more likely than less likely that sufficient certificates will be available in future years to allow entities to meet their current year obligations and seek refund of shortfall charges; and
  • the price of certificates is anticipated to be less than the tax effective cost of the shortfall charge.

2017–18 Comparative Amendments

Adjustments have been made to comparatives to ensure consistency with 2018-19 disclosures.

Events After the Reporting Period

Departmental

There was no subsequent event between balance and signing of the financial statements that had the potential to significantly affect the ongoing structure and financial activities of the CER.

Administered

There was no subsequent event between balance and signing of the financial statements that had the potential to significantly affect the ongoing structure and financial activities of the CER.

1. Financial performance

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

1.1 Expenses

1.1A: Employee Benefits

2019

2018

$’000

$’000

Wages and salaries

29,256

29,387

Superannuation

Defined contribution plans

3,297

3,176

Defined benefit plans

2,133

2,237

Leave and other entitlements

5,071

3,425

Separation and redundancies

371

205

Other

77

334

Total employee benefits

40,205

38,764

Accounting Policy

Accounting policies for employee related expenses are contained in the People and Relationships section.

1.1B: Suppliers

Goods and services supplied or rendered

Information technology services

9,342

9,058

Contractors

6,794

5,554

Consultants

3,148

3,401

Audit and compliance

2,385

2,793

Staff related expenses

1,866

1,590

Property operating expenses

1,235

1,128

Travel and accommodation

578

695

Industry contributions

512

1,301

Remuneration of auditors

405

385

Legal expenses

336

296

Other goods and services

618

319

Total goods and services supplied or rendered

27,219

26,520

Goods supplied

236

380

Services rendered

26,983

26,140

Total goods and services supplied or rendered

27,219

26,520

Other suppliers

Operating lease rentals

Operating lease rentals in connection with

Minimum lease payments

2,837

2,837

Ongoing lease expenses

52

140

Workers compensation expenses

122

89

Total other suppliers

3,011

3,066

Total suppliers

30,230

29,586

Supplier expenditure categories were renamed and reclassified in 2018-19 to better reflect the CER's business activities.

Leasing commitments

The CER in its capacity as lessee has one operating lease for office accommodation. Lease payments are subject to an annual increase at a fixed rate. There are no options for renewal.

Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows (GST inclusive):

Within 1 year

3,772

3,645

Between 1 to 5 years

7,598

11,370

Total operating lease commitments

11,370

15,015

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 and gains

2019

2018

$’000

$’000

Own-Source Revenue

1.2A: Other Revenue

Resources received free of charge

Remuneration of auditors

405

385

Solar program inspection services

372

134

Data integration partnership for Australia

190

-

Total other revenue

967

519

Accounting Policy

Revenue from the rendering of services

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

  1. the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
  2. the probable economic benefits associated with the transaction will flow to the CER.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance amount. Collectability of debts is reviewed at end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

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.

1.2B: Revenue from Government

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 CER 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.

2. Income and expenses administered on behalf of the Government

This section analyses the activities that the CER 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.

2.1 Administered – Expenses

2.1A: Purchase of Australian Carbon Credit Units

Accounting Policy

The CER implemented the Emissions Reduction Fund (ERF) in 2014-15 which is a voluntary scheme that aims to provide incentives for a range of organisations and individuals to reduce their emissions. The scheme is currently implemented through a carbon abatement auction process where the CER contracts with successful participants to purchase ACCUs.

ACCUs are earned by participants through eligible projects for each tonne of carbon dioxide equivalent (tCO2-e) stored or avoided.

The CER's accounting policy for ERF transactions is:

  • the CER will recognise a liability under the ERF where it has a present obligation arising from a past event; and
  • the obligating event is on all ACCU issuance. A liability and expense is recognised on the issuance of all ACCUs less the ACCUs surrendered under the safeguard and voluntary surrenders.

2.1B: RET Refunds

Accounting Policy

The Large-scale Renewable Energy Target creates a financial incentive for the establishment and growth of renewable energy power stations through the creation of large-scale generation certificates.

Refunds are made to external providers on the basis of:

  • surrender of large-scale generation certificates during the ‘allowable refund period’; and/or
  • a downward reassessment of a liable entity’s certificate liability resulting in an overpayment.

The CER records a provision for the refund of shortfall charges where it is satisfied that:

  • a present obligation exists for a refund to be made where a liable entity meets the requirements of the three-year rule as detailed in sections 95-97 of the REE Act;
  • it is more likely than less likely that sufficient certificates will be available in future years to allow entities to meet their current year obligations and seek refund of shortfall charges; and
  • the price of certificates is anticipated to be less than the tax effective cost of the shortfall charge.

2.2 Administered – Income

2.2A: Revenue

Accounting Policy

All administered revenues are revenues relating to ordinary activities performed by the CER on behalf of the Government. As such, administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed.

Taxation Revenue

Carbon price revenue is recognised when liable entities' emissions occur, under the economic transaction method, where it is possible that future economic benefits will occur and can be reliably measured. Unit shortfall charges and other penalties are recognised at the time they are imposed.

Non–taxation revenue

2019

2018

$'000

$000

2.2B: Fees and fines

Renewable energy fees

20,311

15,965

Other

79

74

Total fees and fines

20,390

16,039

Accounting Policy

Renewable energy revenue is generated through the creation and surrender of Renewable Energy Certificates when the underlying transaction occurs. Shortfall charges and interest penalties are recognised at the time they are imposed.

3. Financial position

This section analyses the CER'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.

3.1 Financial Assets

2019

2018

$'000

$'000

3.1A: Cash and cash equivalents

Accounting Policy

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

  • cash on hand
  • 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 and
  • cash in special accounts (administered only).

3.1B: Trade and Other Receivables

Services receivables

Services

506

255

Total services receivables

506

255

Appropriations receivables

Appropriation receivable

18,737

20,100

Total appropriations receivables

18,737

20,100

Other receivables

Statutory receivables

368

377

Total other receivables

368

377

Total trade and other receivables (gross)

19,611

20,732

Less impairment loss allowance

(19)

-

Total trade and other receivables (net)

19,592

20,732

Credit terms for goods and services were within 30 days (2018: 30 days).

3.1C: Reconciliation of the Impairment Allowance

Movements in relation to 2019

Services Receivables $'000

As at 1 July 2019

Increase recognised in net cost of services

19

Total as at 30 June 2019

19

Accounting Policy

Financial assets

Trade 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 subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

3.2 Non-Financial Assets

3.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles

Leasehold improvements

Plant and equipment

Intangibles (Internally developed software)

Total

$’000

$’000

$’000

$’000

As at 1 July 2018

Gross book value

5,514

1,359

59,002

65,875

Accumulated depreciation, amortisation and impairment

(1,121)

(537)

(50,761)

(52,419)

Total as at 1 July 2018

4,393

822

8,241

13,456

Additions

Purchase

-

347

-

347

Internally developed

-

-

1,730

1,730

Depreciation and amortisation

(1,121)

(535)

(4,150)

(5,806)

Total as at 30 June 2019

3,272

634

5,821

9,727

Total as at 30 June 2019 represented by

Gross book value

5,514

1,706

49,819

57,039

Accumulated depreciation, amortisation and impairment

(2,242)

(1,072)

(43,998)

(47,312)

Total as at 30 June 2019

3,272

634

5,821

9,727

Revaluations of non-financial assets

There were no revaluations conducted in 2018-19. On 30 June 2019, the independent valuer (Preston Rowe Paterson) undertook a desktop assessment and confirmed that net fair value of the CER assets approximated their carrying value and required no adjustment.

Accounting Policy – Property, plant and equipment

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 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.

Asset recognition threshold

Purchases of 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 asset capitalisation threshold for Leasehold Improvements is $50,000.

Revaluations

Following initial recognition at cost, plant and equipment are carried at fair value. Carrying amounts are reviewed every year to determine if an independent valuation is required.

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 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 are 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 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 CER 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:

2019

2018

Leasehold improvements

lease term

lease term

Plant and equipment

2 to 9 years

2 to 9 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.

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 CER were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Fair Value

All leasehold improvements, plant and equipment are measured at fair value in the Statement of Financial Position. When estimating fair value, market prices (with adjustment) were used where available. Where market prices were not available, depreciated replacement cost was used (ie level 3).

Level 3 measurements use inputs to estimate fair value where there are no observable market prices for the assets being valued.

The future economic benefits of the CER's plant and equipment and leasehold improvements are not primarily dependent on their ability to generate cash flows. The CER has not disclosed quantitative information about the significant unobservable inputs for the level 3 measurements in these classes.

Revaluations are done with sufficient frequency to ensure that the carrying amounts of assets do not materially differ from the asset's fair values as at reporting date. The CER engaged a qualified consultant, Preston Rowe Paterson, who provided written assurance that the valuation method is in compliance with AASB13 Fair Value Measurement.

Accounting policy - Intangibles

The CER's intangibles comprise internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

The asset capitalisation threshold for internally developed software is $50,000.

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the CER's software are 2 to 5 years (2018: 2 to 5 years).

All software assets were assessed for indications of impairment as at 30 June 2019.

3.3 Payables

3.3A: Suppliers

Settlement of supplier payables is usually made within 30 days.

3.3B: Other Payables

Salaries and wages

279

348

Superannuation

41

42

Lease liability

2,061

2,537

Total other payables

2,381

2,927

4. Assets and liabilities administered on behalf of the Government

This section analyses assets and liabilities that the CER 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.

4.1 Administered - Financial Assets

2019

2018

$’000

$’000

4.1A: Cash and Cash Equivalents

Cash in special accounts

74

1,123

Cash on hand or on deposit

70

6

Total cash and cash equivalents

144

1,129

4.1B: Taxation Receivables

Other taxes

Carbon price revenue - shortfall charges and penalties

3,261

81,098

Renewable energy - shortfall charges and interest

3,998

6,798

Total taxation receivables (gross)

7,259

87,896

Less Impairment loss allowance

(7,107)

(81,788)

Total taxation receivables (net)

152

6,108

4.1C: Trade and Other Receivables

Other receivables

Fines and Fees

1

854

Statutory receivables

33

20

Total other receivables

34

874

Less impairment loss allowance

-

-

Total trade and other receivables (net)

34

874

Trade and other receivables (net) are expected to be recovered in no more than 12 months. Credit terms for goods and services were within 30 days (2018: 30 days).

4.1D: Reconciliation of the Impairment Allowance

Movements in relation to 2019

Taxation Receivables

$'000

As at 1 July 2018

81,788

Amounts recovered and reversed

[75,114]

Increase recognised in net cost of services

433

Total as at 30 June 2019

7,107

Movements in relation to 2018

Taxation Receivables

$'000

As at 1 July 2017

72,778

Increase recognised in net cost of services

9,010

Total as at 30 June 2018

81,788

Accounting Policy

Receivables are carried at amortised cost using the effective interest method. Gains and losses due to impairment, derecognition and amortisation are recognised through profit or loss.

4.2 Administered Payables

2019

2018

$’000

$’000

4.2A: Suppliers

Trade creditors and accruals

201

831

Total Suppliers

201

831

Settlement of supplier payables is usually made within 30 days.

4.2B: Other Payables

Purchase of Australian Carbon Credit Units

78,138

46,361

Other

15

4

Total Other Payables

78,153

46,365

4.3 Administered - Other Provisions

4.3A: Other Provisions

Provision for renewable energy target shortfalls

$’000

As at 1 July 2018

183,722

Additional provisions made

273,198

Amounts used

(35,036)

Total as at 30 June 2019

421,884

2019

2018

$’000

$’000

Other provisions expected to be settled

No more than 12 months

127,235

14,390

More than 12 months

294,649

169,332

Total other provisions

421,884

183,722

5. Funding

This section identifies the CER’s funding structure.

5.1 Appropriations

5.1A: Annual Appropriations ('Recoverable GST exclusive')

Annual Appropriations for 2019

Annual Appropriation

Adjustments to appropriation

Total appropriation

Appropriation applied in 2019 (current and prior years)

Variance

$'000

$'000

$'000

$'000

$'000

Departmental

Ordinary annual services1

69,879

1,189

71,068

71,998

(930)

Capital Budget2

1,161

-

1,161

1,161

-

Total departmental

71,040

1,189

72,229

73,159

(930)

Administered

Ordinary annual services

Administered items3

205,425

-

205,425

131,165

74,260

Total administered

205,425

-

205,425

131,165

74,260

1. The variance of ($0.930m) reflects prior year appropriations applied.

2. 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.

3. The variance of $74.260m reflects changes in the profile of contracted payments under the Emissions Reduction Fund.

Annual Appropriations for 2018

Annual Appropriation

Adjustments to appropriation

Total appropriation

Appropriation applied in 2018

Variance

$'000

$'000

$'000

$'000

$'000

Departmental

Ordinary annual services1

69,969

738

70,707

66,718

3,989

Capital Budget2

1,167

-

1,167

1,167

-

Total departmental

71,136

738

71,874

67,885

3,989

Administered

Ordinary annual services

Administered items3

218,662

-

218,662

140,443

78,219

Total administered

218,662

-

218,662

140,443

78,219

1. The variance of $3.989m reflects an underspend in both supplier and employee expenditure for the year. Of the total appropriation applied of $66.7m, $0.37m was used to fund the purchase of capital assets.

2. Departmental Capital Budget 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.

3. The variance of $78.219m reflects changes in the profile of contracted payments under the Emissions Reduction Fund.

5.1B: Unspent Annual Appropriations ('Recoverable GST exclusive')

2019

2018

$’000

$’000

Departmental

Appropriation Act (No. 2) 2016-17

27

27

Appropriation Act (No. 1) 2017-18

-

20,190

Appropriation Act (No. 1) 2018-19

19,268

-

Total departmental

19,295

20,217

Administered

Appropriation Act (No. 1) 2017-18

10,811

73,467

Appropriation Act (No. 1) 2018-19

137,096

-

Total administered

147,907

73,467

5.1C: Special Appropriations ('Recoverable GST exclusive')

Authority

Appropriation applied

2019

2018

$'000

$'000

Renewable Energy (Electricity) Act 2000, section 157, Administered, Unlimited amount

To enable payments in respect of:
a) section 50 refunds of overpaid amounts
b) section 98 refund of charge where certificates are surrendered
c) section 121 compensation from damage to electronic equipment.

35,272

-

Public Governance, Performance and Accountability Act 2013, section 77, Administered, Refund

To provide an appropriation where an Act or other law requires or permits the repayment of an amount received by the Commonwealth and the Finance Minister is satisfied that, apart from this section, there is no specific appropriation for the repayment.

186

1,473

Clean Energy Act 2011, section 116, Administered, Unlimited amount

To provide an appropriation for the buy-back of certain free carbon units specified by section 116 of the Clean Energy Act 2011.

-

-

Clean Energy Act 2011, section 132, Administered, Unlimited amount

To provide an appropriation for the refund of surplus surrender specified by section 132 of the Clean Energy Act 2011.

-

-

Total special appropriations applied

35,458

1,473

5.2 Special Accounts

Renewable Energy Special Account (Administered)1

2019

2018

(Recoverable GST exclusive)

$'000

$'000

Balance brought forward from previous period

32

31

Opening balance adjustment2

38

-

Adjusted balance brought forward from previous period

70

31

Increases - receipts from buyers

954

7,528

Available for payments

1,024

7,559

Decreases - payments to sellers

(955)

(7,527)

Total balance carried to the next period3

69

32

Balance represented by:

Cash held in the CER bank accounts

69

32

Cash held in the Official Public Account

-

-

Total balance carried to the next period

69

32

1 Appropriation: Public Governance, Performance and Accountability Act 2013 section 80. Establishing Instrument: Renewable Energy (Electricity) Act 2000, section 30R.

The purposes of the Renewable Energy Special Account are as follows:

(a) paying amounts under paragraph 30N(3)(b) in relation to the transfer of certificates;

(b) paying amounts under subparagraph 30P(4)(b)(ii) in relation to the transfer of certificates;

(c) refunding amounts under regulations made for the purpose of paragraph 30U(2)(i); and

(d) paying amounts of GST for which the Regulator is liable because of the creation of certificates for purchasers under section 30P.

Transactions related to the small-scale technology certificates (STC) Clearing House are reported in the Administered Schedule of Assets and Liabilities as Cash and cash equivalents and Supplier payables. This is because the CER is facilitating transactions between buyers and sellers through the STC Clearing House and any net cash resulting is not revenue for Government.

2 The opening balance adjustment relates to the restatement of the 30 June 2018 balance to reflect the correct reclassification of cash available to purchase STCs from householders and registered agents through the STC Clearing House.

3 This balance is reflected in the $0.074m cash in special accounts under Note 4.1A and is comprised of the following amounts:

  • $0.069m payable to sellers; and
  • $0.005m payable to the Official Public Account.

5.3 Regulatory Charging Summary

2019

2018

$’000

$’000

External Revenue

Administered

20,390

16,039

Total external revenue

20,390

16,039

Regulatory charging activities:

Registration, application, accreditation and renewable energy certificate fees.

5.4 Net Cash Appropriation Arrangements

2019

2018

$’000

$’000

Total comprehensive income less depreciation/amortisation expenses previously funded through revenue appropriations

411

2,388

Plus: depreciation/amortisation expenses previously funded through revenue appropriation

(5,806)

(9,128)

Total comprehensive loss - as per the Statement of Comprehensive Income

(5,395)

(6,740)

From 2010-11, the Government introduced net cash appropriation arrangements, where revenue appropriations for depreciation/amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations. Capital budgets are to be appropriated in the period when cash payment for capital expenditure is required.

6. 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.

6.1 Employee Provisions

2019

2018

$’000

$’000

6.1A: Employee Provisions

Leave

10,960

9,963

Separations and redundancies

139

-

Total employee provisions

11,099

9,963

Accounting policy

Liabilities for ‘short-term employee benefits and termination benefits expected within twelve months of the end of reporting period are measured at their nominal amount. The nominal amount is calculated on the rates expected to be paid on settlement of the liability.

Leave

The liability for employee benefits includes provision for annual leave and long service leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the CER'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 using the shorthand method as prescribed in the Financial Reporting Rule 2015. 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 CER 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

The CER's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or 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 CER 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 CER accounts for the contributions as if they were contributions to defined contribution plans.

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

6.2 Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the CER, directly or indirectly, including any director (whether executive or otherwise) of the CER. The CER has determined the key management personnel to be the Chair, members of the Regulator, and members of the strategic leadership team. Key management personnel remuneration is reported in the table below:

2019

2018

$’000

$’000

Short-term employee benefits

1,838

2,006

Post-employment benefits

281

307

Other long-term employee benefits

177

69

Termination benefits

-

-

Total key management personnel remuneration expenses

2,296

2,382

The total number of key management personnel that are included in the above table are 11 (2018: 14).

Total remuneration is calculated on a pro-rata basis equal to time spent in the role for those staff who acted during the reporting period in the role of a key management personnel.

The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio and Cabinet Ministers. The Ministerial remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the CER.

6.3 Related parties

Related party relationships

The CER is an Australian Government controlled entity. Related parties to the CER are:

  • Key Management Personnel of the CER, their close family members, and entities controlled or jointly controlled by either;
  • Portfolio and Cabinet Ministers - key management personnel for the consolidated Whole of Government accounts; and
  • all other Australian Government entities.

Transactions with related parties

Significant transactions with related parties can include:

  • purchase of goods and services;
  • asset purchases, sales, transfers or leases;
  • selling renewable energy certificates under the renewable energy scheme following the installation of rooftop solar panels; and
  • debts forgiven.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the CER, it has been determined that there are no related party transactions to be disclosed other than key management personnel remuneration disclosed in Note 6.2.

7. Managing uncertainties

This section analyses how the CER manages financial risks within its operating environment.

7.1A: Contingent Assets and Liabilities

Claims for damages or costs

2019

2018

$’000

$’000

Contingent liabilities

Balance from previous period

(485)

(485)

Obligations expired

485

-

Total contingent liabilities

-

(485)

Quantifiable Contingencies

In 2018 the contingent liability was in respect of one request for an act of grace payment requested from the Department of Finance relating to the carbon pricing mechanism. The act of grace application was withdrawn in 2018-19.

Unquantifiable Contingencies

There were no unquantifiable 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.

7.1B Administered - Contingent Assets and Liabilities

Claims for damages or costs

2019

2018

$’000

$’000

Contingent assets

Balance from previous period

1,771

-

New contingent assets recognised

-

1,771

Re-measurement

(1,771)

-

Total contingent assets

-

1,771

Contingent liabilities

Balance from previous period

(51,641)

(12,763)

New contingent liabilities recognised

-

(38,878)

Liabilities realised

51,641

-

Total contingent liabilities

-

(51,641)

Net contingent liabilities

-

(49,870)

Quantifiable Administered Contingencies

The above table contains $ nil (2018: $1,771,000) of contingent assets. The contingent asset relates to a debt owed to the CER by an entity under the Renewable Energy (Electricity) Act 2000. In 2018-19 the contingent asset was re-measured to a nil value as the CER assessed the probability of recovering the debt as remote.

The above table contains $nil (2018: $51,641,000) of contingent liabilities in respect of large-scale generation shortfall charges incurred under the Renewable Energy (Electricity) Act 2000 which may be refunded to entities if they meet certain conditions under the three year rule. The estimates are based on the amount of the shortfall charges paid less an administration fee. In 2018-19 a change in market conditions has led to the opening contingent liability being either refunded or recognised as a provision in 2019.

Of the $51,641,000 transferred to the provision for renewable energy target shortfalls (note 4.3A), net refunds of $19,505,000 were made during 2018-19. The remaining $32,136,000 comprises part of the closing provision balance at 30 June 2019.

Unquantifiable Administered Contingencies

There were no unquantifiable contingent assets or liabilities as at 30 June 2019 (2018: Nil).

7.2 Financial Instruments

2019

2018

$’000

$’000

7.2A: Categories of Financial Instruments

Financial Assets under AASB 139

Loans and receivables

Cash and cash equivalents

117

Trade receivables

255

Total loans and receivables

372

Financial Assets under AASB 9

Financial assets at amortised cost

Cash and cash equivalents

558

Trade receivables (gross)

506

Total financial assets at amortised cost

1,064

Total financial assets

1,064

372

Financial Liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

3,928

4,687

Total financial liabilities measured at amortised cost

3,928

4,687

Total financial liabilities

3,928

4,687

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

AASB 139 original classification

AASB 9 new classification

AASB 139 carrying amount at
1 July 2018

AASB 9 carrying amount at
1 July 2018

Financial assets class

Note

$'000

$'000

Cash and cash equivalents

3.1A

Loans and receivables

Amortised Cost

117

117

Trade receivables (gross)

3.1B

Loans and receivables

Amortised Cost

255

255

Total financial assets

372

372

Accounting Policy

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, the CER classifies its financial assets as measured at amortised cost.

The classification depends on both the CER'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 CER 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.

Impairment of Financial Assets

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 de-recognition 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 Amortised Cost

Financial liabilities 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).

2019

2018

$’000

$’000

7.2B: Net Gains or Losses on Financial Assets

Financial assets at amortised cost

Impairment

(19)

-

Net gains/(losses) on financial assets at amortised cost

(19)

-

7.3 Administered – Financial Instruments

2019

2018

$’000

$’000

7.3A: Categories of Financial Instruments

Financial Assets under AASB 139

Loans and receivables

Cash on hand or on deposit

1,129

Total loans and receivables

1,129

Financial Assets under AASB 9

Financial assets at amortised cost

Cash on hand or on deposit

144

Total financial assets at amortised cost

144

Total financial assets

144

1,129

Financial Liabilities

Financial liabilities measured at amortised cost

Supplier payables

201

831

Purchase of Australian Carbon Credit Units

78,138

46,361

Other payables

15

4

Total financial liabilities measured at amortised cost

78,354

47,196

Total financial liabilities

78,354

47,196

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

AASB 139 original classification

AASB 9 new classification

AASB 139 carrying amount at
1 July 2018

AASB 9 carrying amount at
1 July 2018

Financial assets class

Note

$'000

$'000

Cash and Cash Equivalents

4.1A

Loans and receivables

Amortised Cost

1,129

1,129

Total financial assets

1,129

1,129

8. Managing uncertainties

This section analyses how the CER manages financial risks within its operating environment.

8.1 Aggregate Assets and Liabilities

2019

2018

$’000

$’000

8.1A: Aggregate Assets and Liabilities

Assets expected to be recovered in:

No more than 12 months

22,065

22,291

More than 12 months

9,155

13,332

Total assets

31,220

35,623

Liabilities expected to be settled in:

No more than 12 months

9,657

10,264

More than 12 months

7,751

7,313

Total liabilities

17,408

17,577

8.1B: Administered - Aggregate Assets and Liabilities

Assets expected to be recovered in:

No more than 12 months

330

8,111

More than 12 months

-

-

Total assets

330

8,111

Liabilities expected to be settled in:

No more than 12 months

205,589

61,586

More than 12 months

294,649

169,332

Total liabilities

500,238

230,918