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Notes to and forming part of the financial statement

Overview

Objectives of the Department of Parliamentary Services (DPS)

The Department of Parliamentary Services (the department) is an Australian Commonwealth controlled entity. It is a not‐for‐profit entity. The department is structured to meet the following outcome:

  • Support the functions of Parliament and parliamentarians through the provision of professional services, advice and facilities, and maintain Australian Parliament House.

The continued existence of the department in its present form and with its present programs is dependent on continuing funding by Parliament.

The department's activities contributing toward this outcome are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the department in its own right. Administered activities involve the management or oversight by the department, on behalf of the Parliament and the Presiding Officers, of items controlled or incurred by the Parliament.

The department conducts the following administered activities on behalf of the Parliament:

  • Parliament House Works Program: Effective stewardship of Australian Parliament House, including effectively managing the Australian Parliament House capital works plan, and effectively delivering the Security Upgrade Implementation Plan.

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.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

All assets have been assessed for impairment at the end of the reporting period, and no impairment indicators exist unless otherwise stated.

New Australian Accounting Standards (AAS)

During 2019-20, DPS adopted all applicable AAS that became effective during 2019-20. With the exception of the below, the application of new standards did not materially impact the operations of DPS:

New Australian Accounting Standards (AAS)

Standard/ Interpretation

Nature of change in accounting policy, transitional provisions1 and adjustment to financial statements

AASB 16 Leases

AASB 16 became effective on 1 July 2019.

This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

DPS application of AASB 16 Leases

The department adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the

standard. DPS applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as at the date of initial application.

As a lessee, the department previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, the department recognises right-of-use assets and lease liabilities for most leases. However, the department has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the department’s incremental borrowing rate as at 1 July 2019. The department’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.26%.

The right-of-use assets were measured as follows:

a) Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

b) All other leases: the carrying value that would have resulted from AASB 16 being applied from the commencement date of the leases, subject to the practical expedients noted above.

Impact on transition:

On transition to AASB 16, the department recognised right-of-use assets and lease liabilities for future lease commitments (Building $1.73m, Other plant & equipment $0.23m).

DPS application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not‐For‐Profit Entities

There is nil impact on assets, liabilities, income or expenses on transition to AASB 15.

Taxation

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

Revenues, expenses and assets are recognised net of GST except:

a) where the amount of GST incurred is not recoverable from the Australian Taxation Office, and

b) 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.

Prior year adjustments

No changes have been made to departmental prior year disclosures.

In 2019-20, a heritage and cultural artwork piece was recognised for the first time in the Administered schedule of comprehensive income, the Administered schedule of assets and liabilities and Note 4.1A. This was previously disclosed as Assets held in trust.

Events after the reporting period

There were no subsequent events that had the potential to significantly affect the ongoing structure and financial activities of the department.

B. Budget Variance Commentary

Budget Variance Commentary - Departmental

DEPARTMENTAL

Note reference

Affected line items

Explanation of major Variance

B1. Covid-19

Statement of Comprehensive Income:

  • Sale of goods and rendering of services
  • Suppliers
  • Appropriations

Changes introduced in response to COVID-19 pandemic have impacted DPS operations in the following ways:

  • Reduction in revenue due to the closure of Australian Parliament House (APH) resulting in lower than anticipated catering and events functions. There was also a reduction in related supplier costs.
  • Reduction in revenue due to rent relief provided to the APH licensees.
  • Increase in Information and Communication Technology (ICT) supplier costs due to transition to a remote working environment.
  • Increase in APH cleaning costs.
  • Deficit funded with prior year appropriations.

B2. Non-Financial Assets

Statement of Comprehensive Income:

  • Changes in asset revaluation reserve
  • Suppliers expense
  • Depreciation and amortisation

Statement of Financial Position:

  • Other plant and equipment
  • Information and communication technology
  • Right of use assets
  • Lease liability

The budget for non-financial assets is set with reference to the 2017-18 financial results. Other factors contributing to the variances are:

Valuations:

Actual results included the impact of asset revaluations for both 2018-19 and 2019-20 which are difficult to predict for budget purposes.

  • 2018-19 valuation resulted in an increase in value of Other plant and equipment asset class.
  • 2019-20 valuation resulted in a decrease in value of Information Communication Technology.

Capital program of works:

Capital expenditure for the year was under budget due to delays across a number of projects including COVID‑19 impacts.

AASB 16:

The requirements under AASB 16 Leases resulted in the recognition of Right of Use Assets and lease liabilities which had not been budgeted for.

B3. Employees

Statement of Financial Position:

  • Employee provisions

The budget for employee provisions is set with reference to the 2017-18 financial results. The other factor contributing to the variance is employee provision valuations for both 2018-19 and 2019-20 which resulted in increments due to movements in the Commonwealth bond rate to discount the liabilities.

B4. Other differences

Statement of Comprehensive Income:

  • Employee benefits
  • Suppliers

  • The classification of expenditure between Supplier and Employee benefits cost in the budget does not reflect expenditure profile in the financial statements. This has since been corrected through the Mid-Year Economic and Fiscal Outcome (MYEFO) budget.
  • Transfer of Section 74 receipts to the Official Public Account and subsequent drawdown is grossed up, while this has been netted off in the budget.

Budget Variance Commentary - Administered

ADMINISTERED

Note reference

Affected line items

Explanation of major Variance

B5. Non-Financial assets

Administered Schedule of Comprehensive Income:

  • Changes in asset revaluation reserve
  • Depreciation and amortisation
  • Assets first recognised

Administered Schedule of Assets and Liabilities

  • Land
  • Buildings
  • Heritage and cultural
  • Other plant and equipment
  • Suppliers

The budget for non-financial assets is set with reference to the 2017-18 financial results. Other factors contributing to the variances are:

Valuations:

Actual results included the impact of asset revaluations for both 2018-19 and 2019-20 which are difficult to predict for budget purposes.

  • 2018-19 valuation resulted in an increment for Land, Buildings and Other plant and equipment.
  • 2019-20 valuation resulted in an increment for Buildings and Other plant and equipment.

Asset reclassification:

During 2019-20 an artwork piece was reclassified from asset held in trust to heritage and cultural assets.

Capital program of works:

Administered capital expenditure was higher than budgeted due to prior year project delays in previous year being caught up in 2019-20.

B6. Other differences

Administered Schedule of Assets and Liabilities

  • Cash and equivalents
  • Suppliers

Timing of payments to creditors. A payment was made to creditors on 30 June 2020, with funds clearing the bank on 1 July 2020.

1. Financial performance

This section analyses the financial performance of the department.

1.1. Expenses

Employee related information is disclosed in the People section in Note 6.1A.

Note 1.1A: Suppliers

2020

2019

$'000

$'000

Goods and services supplied or rendered

Contractors and professional services

7,257

6,542

Catering labour hire

4,154

3,880

Information communication and technology

14,516

12,941

Property operating expenses

14,297

14,256

Office equipment and supplies

1,246

1,290

Employee related expenses

2,354

2,937

Cost of goods sold

3,638

3,468

Other

193

217

Total goods and services supplied or rendered

47,655

45,531

Goods supplied

9,130

9,392

Services rendered

38,525

36,139

Total goods and services supplied or rendered

47,655

45,531

Other suppliers

Workers compensation expenses

1,525

1,388

Operating lease rentals1

0

902

Short-term leases

13

0

Low value leases

24

0

Variable lease payments

39

0

Total other suppliers

1,601

2,290

Total suppliers

49,256

47,821

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.

The department has short-term and low value lease commitments of $0.04m as at 30 June 2020.

The above lease disclosures should be read in conjunction with the accompanying notes 3.2A and 3.4A.

Accounting Policy

Short-term leases and leases of low-value assets

The department has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (less than $10,000). The department recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

1.2. Own-source revenue and gains

1.2 Own-resource revenue and gains

2020

2019

OWN SOURCE REVENUE

$'000

$'000

Note 1.2A: Revenue from contracts with customers

Parliament shop

1,054

1,287

Catering

8,556

7,855

Rendering of other services

1,103

1,347

Licence revenue

1,558

2,049

Public carpark

336

386

Total revenue from contracts with customers

12,607

12,924

Disaggregation of revenue from contracts with customers

Disaggregation of revenue from contracts with customers

Type of customer:

Australian Government entities (related parties)

1,103

1,270

State and Territory Governments

31

44

Non-government entities

11,473

11,610

12,607

12,924

Timing of transfer of goods and services:

Over a period of time

2,110

2,695

At a point in time

10,497

10,229

12,607

12,924

Accounting policy

Revenue from the sale of goods is recognised when control has been transferred to the buyer. Revenue from the sales of services is recognised when the performance obligation is satisfied.

DPS considers revenue at a point in time as revenue relating to sales through parliament shop, catering and public carpark facilities. Over a period of time revenue relates to services provided such as accommodation licences, and rendering of other services.

Where payment is not received at a point of sale terminal DPS payment terms are 30 days from the date of invoice recognised at the nominal amounts due less any impairment allowance. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

The transaction price is the total amount of consideration to which the department expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

2. Income and expenses administered on behalf of Government

This section analyses the financial performance of the activities that the department does not control but administers on behalf of the Government.

2.1. Administered – Expenses

Note 2.1A: Suppliers

2020

2019

$'000

$'000

Goods and services supplied or rendered

Contractors and professional services

54

699

Security project administration costs

390

848

Maintenance

11,833

3,574

Total goods and services supplied or rendered

12,277

5,121

Goods supplied

107

180

Services rendered

12,170

4,941

Total goods and services supplied or rendered

12,277

5,121

3. Financial position

This section analyses the department’s assets used to conduct its operations and the operating liabilities incurred as a result.

3.1. Financial assets

Employee related information is disclosed in the People section in Note 6.1B.

Note 3.1A: Trade and other receivables

2020

2019

$'000

$'000

Goods and services receivables

Goods and services

978

960

Total goods and services receivables

978

960

Appropriations receivables

Operating funding for existing programs

13,063

19,098

Departmental Capital Budget

11,429

10,031

Total appropriations receivables

24,492

29,129

Other receivables

GST receivable from ATO

620

686

Other

14

28

Total other receivables

634

714

Total trade and other receivables (gross)

26,104

30,803

Less impairment loss allowance

(59)

(43)

Total trade and other receivables (net)

26,045

30,760

Credit terms for goods and services were within 30 days (2019: 30 days).

Accounting policy

Trade and other receivables

Refer to accounting policy in Note 7.2 Financial instruments.

3.2. Non-financial assets

Note 3.2A: Reconciliation of the opening and closing balances of plant and equipment and intangibles

Property, Plant and equipment

Right of Use Buildings

Information and communication technology

Other plant and equipment

Library collection

Right of Use Equipment

Intangibles 1

Total

$'000

$'000

$'000

$'000

$’000

$’000

$'000

As at 1 July 2019

Gross book value

0

65,083

8,026

7,767

0

84,602

165,478

Accumulated depreciation, amortisation and impairment ¹

0

(25,293)

0

(482)

0

(44,569)

(70,344)

Total as at 1 July 2019

0

39,790

8,026

7,285

0

40,033

95,134

Recognition of right of use asset on initial application of AASB 16

1,730

0

0

0

231

0

1,961

Adjusted total as at 1 July 2019

1,730

39,790

8,026

7,285

231

40,033

97,095

Additions

By purchase

0

4,443

2,506

1,313

0

4,978

13,240

Internally developed

0

0

0

0

0

3,745

3,745

Revaluations recognised in other comprehensive income

0

(236)

0

0

0

0

(236)

Depreciation and amortisation

0

(10,978)

(2,051)

(571)

0

(7,911)

(21,511)

Depreciation on ROU assets

(903)

0

0

0

(57)

0

(960)

Reclassification

0

(4,665)

(35)

(11)

0

4,711

0

Disposals

0

(23)

(186)

0

0

70

(139)

Total as at 30 June 2020

827

28,331

8,260

8,016

174

45,626

91,234

Total as at 30 June 2020 represented by

Gross book value

1,730

28,552

10,286

9,069

231

97,308

147,176

Accumulated depreciation and amortisation

(903)

(221)

(2,026)

(1,053)

(57)

(51,682)

(55,942)

Total as at 30 June 2020

827

28,331

8,260

8,016

174

45,626

91,234

Carrying amount of right-of-use assets

827

0

0

0

174

0

1,001

1 Internally developed component of intangibles total value consists of $11.6m gross value and $3.4m accumulated amortisation.

No material indicators of impairment were found for plant and equipment or intangibles. All revaluations are conducted in accordance with the revaluation policy stated below.

An independent valuation was performed for the Information and communication technology asset class as at 30 April 2020 by Jones Lang LaSalle Advisory Services Pty Ltd and a revaluation decrement of $0.24m for Information and communication technology assets class was adjusted in the asset revaluation reserve (2018-19: an increment of $0.23m for the Other plant and equipment class).

Contractual commitments for the acquisition and lease of plant and equipment and intangible assets

The nature of capital and lease commitments for plant and equipment and intangible assets.

Capital commitments

Lease commitments

2020

2019

2020

2019

$'000

$'000

$'000

$'000

Commitments are payable as follows:

Within 1 year

2,641

2,737

917

0

Between 1 to 5 years

1,649

3,002

138

0

More than 5 years

4

0

0

0

Total commitments

4,294

5,739

1,055

0

Plant and equipment and intangible asset commitments payable are GST inclusive amounts.

Accounting policy and measurement at fair value

DPS has a number of asset classes. The recognition and measurement policy is included in the table below:

Asset class

Initial recognition

Subsequent recognition

Fair value predominantly measured at

Last Comprehensive Valuation

Information and communication technology

At cost.

Fair value.

Current replacement cost

2020

Other plant and equipment

2019

Library collection

Market selling price

2018

Land

Market selling price

2019

Buildings

Current replacement cost

2019

Heritage and cultural

Adjusted market transactions

2017

Other plant and equipment (furniture)

Adjusted market transactions

2019

Intangibles

Cost less accumulated amortisation and accumulated impairment losses.

N/A

N/A

ROU – Building

ROU – Other plant and equipment

Fair value is equal to the asset movement table (Note 3.2A and Note 4.1A) with the exception of intangibles which are valued at cost.

Depreciation rates applying to each class of depreciable assets are based on the following useful lives:

2020

2019

Departmental

Information and communication technology

1 – 40 years

1 – 40 years

Other plant and equipment

5 – 30 years

5 – 30 years

Library collection

3 – 30 years

3 – 30 years

Computer software

2 – 14 years

2 – 14 years

Intangibles

100 years

100 years

Administered

Land

indefinite

indefinite

Buildings

5 – 200 years

5 – 200 years

Heritage & cultural

indefinite

indefinite

Other plant and equipment

2 – 47 years

2 – 47 years

Computer software

2 – 14 years

2 – 14 years

Intangibles

100 years

100 years

The depreciation rates for ROU assets are based on the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

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. These assets are accounted for as separate asset classes to corresponding assets owned outright.

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. Following initial application, an impairment review is undertaken for any right of use lease asset that shows indicators of impairment and an impairment loss is recognised against any right of use lease asset that is impaired. Lease ROU assets continue to be measured at cost after initial recognition.

Impairment

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

Derecognition

An item of any asset class is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Gains or losses from disposal of assets are recognised when control of the asset has been passed to the buyer.

Accounting policy

Heritage and cultural assets

The department has a number of stand‐alone collections, managed as the Parliament House Art Collections (PHAC) including:

  • the rotational collection, consisting largely of contemporary Australian artwork
  • the architectural commissions, consisting of artworks that were commissioned as an integrated part of the architectural design of the building (including commissioned artist‐made furniture)
  • the historic memorials collection, consisting of historical portraits and paintings of significant events
  • the gift collection, consisting of gifts that have been made to the Parliament
  • the constitutional documents, a group of significant archival documents managed as part of the PHAC, and
  • the archive, a range of historic and archival materials about Parliament, the PHAC and the construction of Parliament House.

Heritage and Cultural assets have an indefinite useful life which is maintained through the department’s adoption of appropriate curatorial and preservation policies in respect of the PHAC, which are available via the following link:

http://www.aph.gov.au/About_Parliament/Parliamentary_departments/department_of_Parliamentary_Services/policies.

Judgements and estimates

An annual assessment is undertaken by an independent valuer each year to determine whether the carrying amount of assets are materially different from the fair value, with comprehensive valuations carried out at least once every three to four years. Where assets materially differ a valuation is undertaken. DPS engaged the services of Jones Lang LaSalle Advisory Services Pty Ltd (JLL) to conduct the materiality review, desktop and/or comprehensive valuation. Comprehensive valuations were undertaken for Land, Buildings and Other plant and equipment.

The methods utilised to determine and substantiate the unobservable inputs are derived and evaluated as follows.

Current replacement cost – Assets that do not transact with enough frequency or transparency to determine fair value from directly observable market evidence have been measured utilising the current replacement cost (CRC) approach. Significant judgement and estimates include the valuation of Australian Parliament House under this approach.

In determining replacement costs, unit rates have been applied to the individual asset components to determine current replacement cost. Unit rates have been based on “Greenfield” project costs and include all materials, labour and direct costs. These unit rates have been developed based on advice from Quantity Surveyors, Rider Levett Bucknall Canberra.

In determining physical depreciation and obsolescence adjustments, a range of inputs have been considered including internal capital and maintenance programs and reports as well as proposed asset retirements and replacements. JLL has conducted inspections of material building components to verify the inputs utilised.

Market selling price – Fair value measurement has been determined using the market approach. Significant judgement and estimates for asset classes utilising this approach have included the Land asset, where fair value was determined with reference to recent sales of land with a limited level of comparability due to the restricted nature, distance and unique characteristics of the Land asset.

Adjusted market transactions – Fair value measurement has been determined using the market approach, with adjustments made with regard to the unique characteristics or historic nature of assets within the asset class, resulting in limited directly observable market transactions. Significant judgement and estimates for assets utilising this approach have included the valuation of the 1297 Inspeximus copy of the Magna Carta, undertaken by a specialist valuer who applied significant professional judgement due to the historic nature of the asset.

Note 3.2B: Inventories

2020

2019

$'000

$'000

Inventories held for sale

Parliament shop

263

275

Catering

139

149

Total inventories held for sale

402

424

Total inventories

402

424

During 2020, $3.64m of inventory held for sale was recognised as cost of goods sold (2019: $3.47m), refer to Note 1.1A Suppliers.

Accounting policy

Inventories held for sale are valued at the lower of cost and net realisable value.

3.3. Payables

Note 3.3A: Other payables

2020

2019

$'000

$'000

Wages and salaries

1,310

533

Superannuation

243

108

Deposits received/held

154

512

Other

147

238

Total other payables

1,854

1,391

3.4. Interest bearing liabilities

Note 3.4A: Leases

2020

2019

$'000

$'000

Lease Liabilities1

Buildings

801

0

Plant and equipment

192

0

Total leases

993

0

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 $0.95m.

Accounting policy

Refer Overview section for accounting policy on leases.

4. Assets and liabilities administered on behalf of Government

This section analyses assets used to conduct operations and the liabilities incurred for activities that the department administers on behalf of Government.

4.1. Administered – Non-financial assets

Note 4.1A: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles

Property, plant and equipment

Land

Buildings

Heritage and cultural

Other plant and equipment

Intangibles

Total

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

91,000

2,349,635

112,839

35,860

6,267

2,595,601

Accumulated depreciation and amortisation

0

0

0

0

(1)

(1)

Accumulated impairment

0

(228)

0

0

0

(228)

Net book value 1 July 2019

91,000

2,349,407

112,839

35,860

6,266

2,595,372

Additions

By purchase

0

68,282

672

1,910

1,348

72,212

Gifted assets

0

0

5,500

0

0

5,500

Revaluations recognised in other comprehensive income

0

25,178

0

4

0

25,182

Depreciation and amortisation

0

(36,761)

0

(855)

(488)

(38,104)

Reclassification

0

(145)

(259)

(244)

648

0

Write-offs

0

(2,590)

0

(156)

0

(2,746)

Total as at 30 June 2020

91,000

2,403,371

118,752

36,519

7,774

2,657,416

Total as at 30 June 2020 represented by

Gross book value

91,000

2,403,371

118,752

37,266

8,263

2,658,652

Accumulated depreciation and amortisation

0

0

0

(747)

(489)

(1,236)

Total as at 30 June 2020

91,000

2,403,371

118,752

36,519

7,774

2,657,416

¹All impaired assets have been disposed.

No material indicators of impairment were found for the 2019-20 financial year.

Independent valuations were performed as at 30 April 2020 by Jones Lang LaSalle Advisory Services Pty Ltd. A revaluation increment of $25.18m for building and other plant and equipment asset classes was adjusted in the assets revaluation reserve (2018‑19: increment of $87.91m for land, buildings and other plant and equipment).

Contractual commitments for the acquisition of property, plant and equipment and intangibles

The nature of capital commitments is for the acquisition of property, plant and equipment and intangibles assets.

2020

2019

$'000

$'000

Commitments are payable as follows:

Within 1 year

34,957

28,927

Between 1 to 5 years

25,570

8,996

More than 5 years

281

26

Total commitments

60,808

37,949

Property, plant and equipment and intangible asset commitments payable are GST inclusive amounts.

Accounting Policy

Refer to policy and judgements in departmental non-financial assets (Note 3.2).

Fair value is equal to the asset movement table in Note 4.1A with the exception of intangibles which are valued at cost.

5. Funding

This section identifies the department’s funding structure.

5.1. Appropriations

Note 5.1A: Annual appropriations ('Recoverable GST exclusive')

2020

2019

$'000

$'000

Departmental appropriation

Ordinary annual services

124,666

126,347

Capital budget 1

17,053

19,609

Section 74 receipts 2

15,632

17,818

Total appropriation available

157,351

163,774

Appropriation applied

(161,988)

(161,089)

Variance3

(4,637)

2,685

1 Departmental Capital Budgets are appropriated through Parliamentary Appropriation Act (No.1). They form part of ordinary annual services and are not separately identified in the Appropriation Acts.

2 The departmental operating appropriation is adjusted to include PGPA Act Section 74 receipts.

3 The variance primarily relates to operating deficit during the year.

Note 5.1B: Unspent annual appropriations ('Recoverable GST exclusive')

2020

2019

Departmental

$'000

$'000

Opening unspent appropriation balance

29,129

26,444

Annual appropriation

141,719

145,956

Section 74 receipts

15,632

17,818

Available appropriation

186,480

190,218

Appropriation applied

(161,988)

(161,089)

Closing unspent appropriation

24,492

29,129

Balance comprises of:

Ordinary annual services

13,063

19,098

Capital Budget

11,429

10,031

Closing unspent appropriation

24,492

29,129

Represented by:

Appropriation (Parliamentary Departments) Act (No. 1) 2019-20

15,890

0

Supply (Parliamentary Departments) Act (No. 1) 2019-20

7,093

0

Appropriation (Parliamentary Departments) Act (No. 2) 2018-19

304

2,510

Appropriation (Parliamentary Departments) Act (No. 1) 2018-19

1,205

26,619

Total departmental

24,492

29,129

Accounting policy

Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the department 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.

Note 5.1C: Annual appropriations ('Recoverable GST exclusive')

2020

2019

$'000

$'000

Administered appropriation

Ordinary annual services

11,565

6,249

Assets and liabilities

50,632

45,426

Total appropriation available1

62,197

51,675

Appropriation applied

(80,533)

(78,132)

Variance 2

(18,336)

(26,457)

1 Administered assets and liabilities are appropriated through Parliamentary Appropriation Act (No. 1). They form part of ordinary annual services and are not separately identified in the Appropriation Acts.

2 The variance primarily relates to projects funded from prior year appropriations.

Note 5.1D: Unspent annual appropriations ('Recoverable GST exclusive')

2020

2019

$'000

$'000

Administered

Opening unspent appropriation balance

55,317

81,774

Annual appropriation

62,197

51,675

Available appropriation

117,514

133,449

Appropriation applied

(80,533)

(78,132)

Closing unspent appropriation

36,981

55,317

Balance comprises of:

Ordinary annual services

4,265

4,675

Assets and liabilities

32,716

50,642

Closing unspent appropriation

36,981

55,317

Represented by:

Appropriation (Parliamentary Departments) Act (No. 1) 2019-20

18,366

0

Supply (Parliamentary Departments) Act (No. 1) 2019-20

18,615

0

Appropriation (Parliamentary Departments) Act (No. 2) 2018-19

0

1,061

Appropriation (Parliamentary Departments) Act (No. 1) 2018-19

0

49,040

Appropriation (Parliamentary Departments) Act (No. 1) 2017-18

0

5,216

Total administered

36,981

55,317

Note 5.1E: Disclosure by agent in relation to annual and special appropriations ('Recoverable GST exclusive')

Appropriations applied

2020

2019

Department of Finance

Relationship

$'000

$'000

Total receipts

Provision of electorate office Information Technology services

21,938

21,942

Total payments

(21,938)

(21,942)

Total receipts

Provision of Auspic services

250

244

Total payments

(250)

(244)

Total receipts

Information Technology services for former Prime Ministers

272

49

Total payments

(272)

(49)

6. People

This section describes a range of employment and post-employment benefits provided to our people and our relationships with other key people.

6.1. Employees

Note 6.1A: Employee benefits

2020

2019

$'000

$'000

Wages and salaries

69,924

66,527

Superannuation

Defined contribution plans

8,325

7,331

Defined benefit plans

6,191

6,989

Leave and other entitlements

9,534

10,598

Separation and redundancies

1,401

1,414

Other

1,423

1,127

Total employee benefits

96,798

93,986

Note 6.1B: Employee provisions

Annual leave

9,826

9,019

Long service leave

18,684

17,998

Total employee provisions

28,510

27,017

Accounting policy

Employee provisions include liabilities for ‘short‐term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the end of reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to 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. No provision has been made for sick leave as all sick leave is non‐vesting and the average sick leave taken in future years by employees of the department is estimated to be less than the annual entitlement for sick 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 department’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 by reference to the work of an actuary (using the short‐hand method) as at 30 June 2020. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation

The department's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other superannuation funds held outside the Commonwealth.

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 department makes employer contributions to the employees' superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Australian Government. The department 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. Related party disclosures

Related party relationships:

The department is an Australian Government controlled entity. The related parties to the department are key management personnel as defined below in Note 6.3 and their close family members and/or controlled or joint controlled entities as well as other Australian Government entities.

Transactions with related parties:

The department undertakes a number of functions on behalf of the Australian Parliament, as detailed in the financial statements. In performing these functions, the department transacts with all other Australian Government controlled entities for normal day-to-day business operations provided under normal terms and conditions. These transactions are not considered significant individually to warrant separate disclosure as related party transactions (2018-19: Nil).

6.3. Key management personnel remuneration

AASB 124 defines key management personnel (KMP) as those persons having authority and responsibility for planning, directing and controlling the activities of the department, directly or indirectly (excluding those subject to a fee-for-service contract arrangement where the department is not the direct employer).

The department has determined the KMP to be the Presiding Officers, the Secretary and direct reports to the Secretary, being, the Deputy Secretary, the Parliamentary Librarian and the Chief Information Officer.

In 2018-19, the KMP also included the First Assistant Secretary Building and Security, the Chief Operating Officer and the Chief Finance Officer.

The KMP remuneration is reported in the table below:

6.3 KMP remuneration

2020

2019

$'000

$'000

Short-term employee benefits

1,365

1,842

Post-employment benefits

173

267

Other long-term employee benefits

51

73

Termination benefits

289

Total KMP remuneration expenses1

1,589

2,471

The total number of KMP included in the above table is 4 individuals (2019: 8 individuals). The decrease between years is due to KMP being redefined.

1 The above KMP remuneration does not include the remuneration and other benefits of the Presiding Officers. The Presiding Officers’ remuneration and other benefits are not paid by DPS.

Accounting policy

The department has included all key management personnel that were in acting arrangements throughout the financial year for a minimum period of six months.

7. Managing uncertainties

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

7.1. Contingent assets and liabilities

The department does not have any significant quantifiable contingent assets or liabilities, nor does it have any significant unquantifiable contingent assets or liabilities.

Unquantifiable or remote contingent liabilities/assets

In the normal course of business, the department has a number of items that are either unquantifiable or are not considered probable. At the date of this report, the department does not consider the outcome of any such matters likely to have a significant effect on its operations or financial position.

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.

7.2. Financial instruments

Accounting policy

Financial assets

Financial assets are recognised when the department becomes a party to a 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.

Financial assets at amortised cost

Financial assets included in this category need to meet two criteria:

a) the financial asset is held in order to collect the contractual cash flows, and

b) 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

Financial assets are assessed for impairment at the end of each reporting period based on expected credit losses, using the general approach which measures the loss allowance based on the amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12-month expected credit losses if risk has not increased.

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 derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.

Financial liabilities

Financial liabilities are recognised and derecognised upon ‘trade date’.

Financial liabilities at amortised cost

Financial liabilities, including borrowings, 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, irrespective of having been invoiced.

Note 7.2A: Categories of financial instruments

2020

2019

$'000

$'000

Financial assets at amortised cost

Cash and cash equivalents

1,097

1,143

Trade and other receivables - Goods and services

978

960

Total financial assets at amortised cost

2,075

2,103

Total financial assets

2,075

2,103

Financial liabilities

Financial liabilities measured at amortised cost

Payables - Suppliers

5,437

3,590

Total financial liabilities measured at amortised cost

5,437

3,590

Total financial liabilities

5,437

3,590

7.3. Administered – Financial instruments

Note 7.3A: Categories of financial instruments

2020

2019

$'000

$'000

Financial liabilities

Financial liabilities measured at amortised cost

Payables - Suppliers

18,403

5,123

Total financial liabilities measured at amortised cost

18,403

5,123

Total financial liabilities

18,403

5,123

8. Other information

8.1. Aggregate assets and liabilities

Note 8.1A: Aggregate assets and liabilities

2020

2019

$'000

$'000

Assets expected to be recovered in:

No more than 12 months

31,738

35,949

More than 12 months

91,216

96,045

Total assets

122,954

131,994

Liabilities expected to be settled in:

No more than 12 months

20,268

14,000

More than 12 months

16,526

17,998

Total liabilities

36,794

31,998

Note 8.1B: Administered - Aggregate assets and liabilities

Assets expected to be recovered in:

No more than 12 months

10,587

786

More than 12 months

2,657,417

2,595,372

Total assets

2,668,004

2,596,158

Liabilities expected to be settled in:

No more than 12 months

19,596

5,840

Total liabilities

19,596

5,840