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Financial position

This section analyses the Department of the House of Representatives’ 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.

Note 3: Financial assets

Note 3: Financial assets

2020

2019

$’000

$’000

3A: Cash and cash equivalents

Cash on hand or on deposit1

2,855

617

Total cash and cash equivalents

2,855

617

3B: Trade and other receivables

Goods and services receivables

Goods and services

72

214

Total goods and services receivables

72

214

Appropriations receivables

Appropriation receivable—existing programs

21,114

17,779

Total appropriations receivables

21,114

17,779

Other receivables

Cash held by salary packaging providers

30

28

GST input credits receivable

39

23

Total other receivables

69

51

Total trade and other receivables (gross)

21,255

18,044

Less impairment allowance

-

-

Total trade and other receivables (net)

21,255

18,044

3C: Other investments

Deposits2

-

2,546

Total other investments

-

2,546

  1. The closing balance of cash on hand or on deposit includes the amount matured from the term deposit investment of $2,546,108 on 29/06/2020. Refer to Note 3C for more information.
  2. The department's term deposit of $2,546,108 matured on 29 June 2020. The department reinvested the funds in a new term deposit on 10 July 2020. The source of the deposit was the former Inter-parliamentary Relations Special Account which was subject to a sun-setting provision. The balance of the account was initially invested after the release of a new delegation from the Finance Minister in July 2017. Refer to Note 12A for further details.

Accounting policy

Financial assets

Trade receivables are recognised where the department becomes party to a contract and has a legal right to receive cash. Loans and receivables are assessed for impairment at the end of each reporting period. Allowances are made when collectability of the debt is no longer probable. Trade receivables are derecognised on payment.

Appropriations receivable are appropriations controlled by the department but held in the Official Public Account. Appropriations receivable are recognised at their nominal amounts.

Note 4: Non-financial assets

Note 4: Non-financial assets

4A: Reconciliation of the opening and closing balances of heritage and cultural, property, plant and equipment, and computer software

Heritage and cultural1

Property, plant and equipment

Computer software2

Total

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

454

4,819

909

6,182

Work in progress

-

-

122

122

Accumulated depreciation, amortisation and impairment

-

-

(772)

(772)

Total as at 1 July 2019

454

4,819

259

5,532

Recognition of right-of-use assets on initial application of AASB 16

-

68

-

68

Adjusted total as at 1 July 2019

454

4,887

259

5,600

Additions

Purchase

-

134

-

134

Internally developed

-

-

142

142

Work in progress3

-

-

(108)

(108)

Depreciation and amortisation

-

(410)

(74)

(484)

Depreciation on right-of-use assets

-

(33)

-

(33)

Disposals

Write-off (cost)

-

(1)

(279)

(280)

Right-of-use assets (cost)

-

(16)

-

(16)

Accumulated depreciation, amortisation and impairment

-

8

279

287

Total as at 30 June 2020

454

4,569

219

5,242

.

Total as at 30 June 2020 represented by

Gross book value

454

5,004

772

6,230

Work in progress

-

-

14

14

Accumulated depreciation, amortisation and impairment

-

(435)

(567)

(1,002)

Total as at 30 June 2020

454

4,569

219

5,242

Carrying amount of right-of-use assets4

-

27

-

-

Revaluations of non-financial assets

All revaluations were conducted in accordance with the revaluation policy stated at Note 15. On 30 June 2020 an independent valuer conducted a materiality assessment.

Note 4: Non-financial assets (continued)

2020

2019

$’000

$’000

4B: Inventories

Inventories held for sale

Finished goods

5

7

Total inventories held for sale

5

7

Total inventories

5

7

During 2019-20, $2,054 worth of inventory held for sale was recognised as an expense (2019: $2,246).

$28 of inventory was written off due to damage during 2019–20.

All inventories are expected to be sold or distributed in the next 12 months.

4C: Other non-financial assets

Prepayments

216

225

Total other non-financial assets

216

225

No indicators of impairment were found for other non-financial assets.

Accounting policy

Assets are recorded at cost on acquisition except as stated below. The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if it is probable that future economic benefits associated with the item will flow to the entity; and the cost of the item can be measured reliably. The cost of acquisition includes the initial costs to acquire or construct an item as well as subsequent costs. 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 that 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.

Lease Right of Use (ROU) Assets

Leased ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received (if applicable). These assets are accounted for by Commonwealth lessees as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned.

On initial adoption of AASB 16 the Department has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Lease ROU assets continue to be measured at cost after initial recognition in Commonwealth agency, GGS and Whole of Government financial statements.

Revaluations

Following initial recognition at cost, 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 did 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.

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 reverse 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 entity 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:

2020

2019

Property, plant and equipment

1 to 50 years

1 to 50 years

The entity has items of property, plant and equipment that are heritage and cultural assets that are not depreciated.

Impairment

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 entity 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.

Accounting policy

Heritage and cultural assets

The department has the following heritage and cultural assets with an aggregated fair value of $454,000 (2019: $454,000):

  • Mace — Garrard engraved silver
  • Dispatch Boxes (2), Rosewood with silver and enamel embossing
  • Yirrkala bark petition 14 Aug 1963, bark 59.1cm x 33.2cm
  • Yirrkala bark Petition 28 Aug 1963, wood bark 49.1cm x 30cm
  • Yirrkala bark petition 8 Oct 1968, wood bark 59.1cm x 34cm
  • Rituals — Yirrkala people 1976, wood feathers 47.1cm x 24.2cm.

The department has classified these items as heritage and cultural assets as they are primarily used for purposes that relate to their heritage value and cultural significance.

Heritage and cultural assets have an indefinite useful life which is maintained through the department’s adoption of appropriate curatorial and preservation activities. Where required, advice on preservation and restoration activities is sought from the Parliament’s Design Integrity and Archives Unit which is operated by the Department of Parliamentary Services.

Intangibles

The entity’s intangibles comprise internally developed software for internal use. These assets are 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 entity’s software are 3 to 20 years (2019: 3 to 20 years).

All software assets were assessed for indications of impairment as at 30 June 2020.

Accounting policy

Inventories held for sale are valued at the lower of cost and net realisable value. Inventories held for distribution are valued at cost, adjusted for any loss of service potential. Inventories acquired at no cost or nominal consideration are initially measured at current replacement cost at the date of acquisition.

Note 5: Payables

Note 5: Payables

2020

2019

$’000

$’000

5A: Suppliers

Trade creditors and accruals

418

389

Total suppliers

418

389

Settlement was usually made within 20 days.

5B: Other payables

Salaries and wages

234

109

Superannuation

44

22

Salary sacrifice payable

30

28

Unearned income

-

95

Input tax credit (GST) payment to the Australian Taxation Office

-

1

Other payables

38

1

Total other payables

346

256

Note 6: Interest bearing liabilities

Note 6: Interest bearing liabilities

2020

2019

6: Leases

Lease liabilities

27

-

Total leases

27

-

  1. The department has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Total cash outflow for leases for the year ended 30 June 2020 was $32,546.