The Department of Finance (Finance) is an Australian Government controlled not-for-profit entity, its purpose being:
to assist the Australian Government to achieve its fiscal and policy objectives by advising on expenditure, managing sustainable public sector resourcing, driving public sector transformation and delivering efficient, cost-effective services to, and for, the Government.
Finance is structured to fulfil its purpose through three outcomes, as set out in the 2020-21 Portfolio Budget Statements (PBS) these are:
Outcome 1: Support sustainable Australian Government finances through providing high quality policy advice and operational support to the government and Commonwealth entities to maintain effective and efficient use of public resources.
Outcome 2: Support an efficient and high-performing public sector through providing leadership to Commonwealth entities in ongoing improvements to public sector governance, including through systems, frameworks, policy, advice
and service delivery.
Outcome 3: Support for parliamentarians and others as required by the Australian Government through the delivery of, and advice on, work expenses and allowances, entitlements and targeted programs.
Finance’s activities are classified as either Departmental or Administered. Departmental activities involve the use of assets, liabilities, incomes and expenses controlled or incurred by Finance in its own right.
Administered items are controlled by the Government and managed or overseen by Finance on behalf of the Government. These items are distinguished from Departmental items using shading.
Administered items include:
Superannuation schemes for current and former civilian Australian Government employees, parliamentarians, current and former Governor-Generals, Federal Judges and Federal Circuit Court Judges
Australian Government investment funds
Entitlements, allowances and work expenses provided to current and former members of parliament and their staff
State, territory and Defence Housing Australia (DHA) government loans and interest
Investments in Commonwealth entities and companies.
In some areas of this financial report, Departmental and Administered items are included in the same section. This is for presentation purposes only and these balances should not be compared.
The continued existence of Finance in its present form and with its present programs is dependent on government policy and on continued funding by Parliament.
Basis of preparation
The financial statements are general purpose financial statements required by section 42 of the PGPA Act. They have been prepared in accordance with the PGPA (Financial Reporting) Rule 2015 (FRR) and Australian Accounting Standards (AAS) and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period. Finance has applied the Reduced Disclosure Requirements issued by the AASB as a minimum and has included additional disclosures for financial instruments, fair value and superannuation as required under subsection 18(3) of the FRR.
Basis of accounting
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.
All assets have been assessed for impairment at the end of the reporting period and no impairment indicators exist unless otherwise stated.
Minor changes were made to the comparatives in both the Departmental and Administered financial statements as a
result of the reclassification or merging of some line items. There was no change to the comparative operating surplus or net assets reported.
How to read this report
The following pages set out the notes to the financial statements, which include further information required to understand the financial statements. This has been assessed against materiality and relevance to the operations, financial position and performance of Finance. All amounts are presented in Australian dollars (AUD).
Key judgements and estimates
In applying Finance's accounting policies, management has made a number of judgements and applied estimates and assumptions to future events. Judgements and estimates that are material to the financial statements are found in the following notes:
C1 General insurance activities
C2 Investment funds
D3 Financial instruments
D5 Non-financial assets
E1 Employee benefits
With the exception of judgements and estimates applied in the above notes, no allowance is made for the effect of changing prices on the results or the financial position.
New Australian Accounting Standards (AAS)
All new, revised or amending standards that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material financial impact on Finance’s financial statements.