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.
The financial statements and notes have been prepared in accordance with:
Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR).
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.
Machinery of Government Changes
On 29 May 2019, following an Administrative Arrangements Order the name of the Department was changed from the Department of Jobs and Small Business to the Department of Employment, Skills, Small and Family Business, and the following changes were made to the functions of the Department.
Functions transferred from the Department of Education:
Skills and Training programs special appropriations - VET Student Loans and Trade Support Loans and Student Identifiers special account.
Functions transferred to the Attorney-General’s Department:
The Fair Entitlements Guarantee Act 2012 and all portfolio entities. The implications of the portfolio entities transferring out is that Comcare investment and payable and the Coal Mining Industry (Long Service Leave) Corporation investment will be removed from the Department’s Administered financial statements.
Refer to Restructuring Notes 17 and 28.
Significant Accounting Judgements and Estimates
In the process of applying the accounting policies listed in this note, the Department has made and relied on the following judgements that have the most significant impact on the amounts recorded in the financial statements:
the jobactive and Transition to Work accruals for Supplier and Subsidies expense, developed by the Department have been reviewed by an independent actuary;
the Department’s recreation and long service leave provisions are measured at the present value of the estimated future cash flows. In 2018−19 the Australian Government Actuary undertook an assessment of the Department’s leave provisions taking into account the likely tenure of existing staff, patterns of leave claims and payouts, future salary movements and discount rates;
the VET Student Loans (VSL) program commenced on 1 January 2017 and provides income contingent loans to eligible students undertaking vocational education and training in eligible courses. The Australian Government Actuary has developed a model to provide a number of financial measures related to the receivable, including an estimate of debt not expected to be repaid. Consideration is given to projection of future income of debtors, pattern and timing of repayments, changes in legislation, the recovery of concessional debt and yield curve for discounting future cash flows; and
the Trade Support Loans (TSL) scheme is an income contingent loan scheme that came into effect during 2014-15 to assist apprentices with costs of living while training towards their qualification. The Australian Government Actuary has taken into consideration the debt not expected to be repaid due to the compulsory threshold not being met, the deferral adjustment and the discount arising upon the successful completion of the apprenticeship.
The Department made no other assumptions or estimates identified as having a significant risk of causing a material adjustment to the 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.
Tier 1 requirements have been applied to administered disclosures in respect of AASB 7 Financial Instruments: Disclosure and AASB 13 Fair Value Measurement.
New Australian Accounting Standards
Changes to AASB 9 Financial Instruments are effective for periods commencing from 2018−19, these changes are not expected to have a material impact on the financial statements.
The Department will apply AASB 15 Revenue Contracts with Customers from 2019−20. The standard requires revenue from such contracts to be recognised as the entity transfers goods and services to the customer. This standard is not expected to have a material impact on the financial statements.
The Department will apply AASB 16 Leases from 2019−20. Whilst this standard will increase both assets and liabilities, it is not expected to have a material impact on the financial statements.
The Department is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST). Revenues, expenses and non-financial assets 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.
Events After the Reporting Period
On 1 July 2019, the Department’s outcome statements changed to align with the restructuring of the Department due to the Administrative Arrangements Order issued on 29 May 2019 and are as follows:
Foster a productive and competitive labour market through policies and programs that assist job seekers into work, meet employer needs and facilitate the growth of small and family businesses.
Promote growth in economic productivity and social wellbeing through access to quality skills and training.