Independent Auditor's Report

Statement by the Secretary and Chief Finance Officer

Overview

Basis of Preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013 (PGPA).

The financial statements have been prepared in accordance with the:

• PGPA (Financial Reporting) Rule 2015 (FRR); and
• Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and are 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 and values are rounded to the nearest thousand dollars unless otherwise specified.

New Accounting Standards

No accounting standard has been adopted in the current reporting period earlier than the application date as required by the standard.

The only new, revised or amended standards and interpretations first applied to the current reporting period and have been reflected in the department’s financial statements was AASB 9 Financial instruments (AASB 9). The impacts of adopting this standard have been incorporated into the statement of changes in equity and the administered reconciliation schedule as opening balance adjustments – refer Note 12 Financial Instruments and Note 24 Administered - Financial Instruments.

All other new, revised or amended standards and interpretations that were issued prior to the sign-off date and are applicable in the current reporting period did not have a material effect, and are not expected to have a future material effect on the department’s financial statements.

Comparative Figures

Certain comparative amounts have been reclassified to conform with the current year’s reporting presentation. There has been no impact on the net operating result or net assets as a result of these adjustments.

Taxation

The department is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST). Revenues, expenses, assets and liabilities are recognised net of GST except where the amount of GST incurred is not recoverable from the Australian Taxation Office and for receivables and payables.

Reporting of Administered activities

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes. Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Breach of Section 83 of the Constitution

Section 83 of the Commonwealth of Australia Constitution Act 1900 (“the Constitution”) provides that no amount may be paid out of the Consolidated Revenue Fund except under an appropriation by law. In 2018-19, the department identified payments that did not meet the statutory conditions for payment under Section 83, which resulted in one confirmed breach of the Plant Health Australia Funding Act 2002 (PHA Act) and potential breaches of the Farm Household Support Act 2014 (FHA Act).

The confirmed Section 83 breach of the PHA Act related to an overpayment of $222,036. Upon identification of this breach corrective action was taken on 6th August 2018 for the department to recover the amount incorrectly paid.

Total payments of $112,381,000 under the FHA Act was made during 2018-19. As at 30 June 2019, $7,538,000 worth of overpayments have been recorded as debts, and within this there may be amounts that relate to potential breaches. It should be noted that it is impossible to completely eliminate the potential for Section 83 breaches for FHA Act payments made by Department of Human Services on behalf of the department. In the majority of cases, information provided by customers is relied upon to estimate the entitlements paid. This information provided by customers is not always accurate or is subject to circumstances which can result in a breach of Section 83 of the Constitution.

Events After the Reporting Period

Departmental

There have been no events after the reporting period that had the potential to significantly affect the ongoing structure and financial activities of the department.

Administered

On 1 July 2019 Appropriation Act (No.2) 2016-17 ($25 000 000) and Supply Act (No.2) 2016-17 ($15 000 000) self-repealed. There have been no other events after the reporting period that had the potential to significantly affect the ongoing structure and financial activities of the department.

Notes to and forming part of the Financial Statements—index

Overview
Departmental Financial Statements
Note 1: Expenses
Note 2: Income
Note 3: Financial Assets
Note 4: Non–Financial Assets
Note 5: Payables
Note 6: Provisions
Note 7: Aggregate Assets and Liabilities
Note 8: Restructuring
Note 9: Contingent Assets and Liabilities
Note 10: Key Management Personnel Remuneration
Note 11: Related Party Disclosures
Note 12: Financial Instruments
Note 13: Appropriations
Note 14: Special Accounts
Note 15: Regulatory Charging Summary
Administered Financial Schedules
Note 16: Administered – Expenses
Note 17: Administered – Income
Note 18: Administered – Financial Assets
Note 19: Administered – Non-Financial Assets
Note 20: Administered – Payables
Note 21: Administered – Provisions
Note 22: Administered - Aggregate Assets and Liabilities
Note 23: Administered – Contingent Assets and Liabilities
Note 24: Administered – Financial Instruments
Note 25: Administered – Appropriations
Note 26: Administered – Special accounts
Note 27: Interest in Cooperative Research Centre