Overview

Objectives of the National Archvies of Australia

The National Archives of Australia is an Australian Government controlled not-for-profit entity. The National Archives' role is to preserve Australia’s most valuable government records, encourage their use by the public and to promote good records management by Australian Government agencies.

The National Archives is structured to meet the single outcome as follows:

Outcome 1: To promote the creation, management and preservation of authentic, reliable and useable Commonwealth records and to facilitate Australians' access to the archival resources of the Commonwealth.

The National Archives Statement of Comprehensive Income and Statement of Financial Position represents the outcome statement as all Income, Expenditure, Assets and Liabilities related to Outcome 1 above.

The continued existence of the National Archives in its present form and with its present program is dependent on Government policy and on continuing funding by Parliament for the National Archives' administration and program.

The 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:

• Public Governance, Performance and Accountability (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 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.

Unless an alternative treatment is specifically required by an accounting standard or the FRR, assets and liabilities are recognised in the statement of financial position, when and only when, it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under executory contracts are not recognised unless required by an accounting standard.

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the Statement of Comprehensive Income, when and only when, the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

New Accounting Standards

All new/revised/amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period were adopted and did not have a material effect on the entity’s financial statements.

Future Australian Accounting Standard Requirements
The following new standard was issued by the Australian Accounting Standards Board prior to the signing of the statement by the Accountable Authority and Chief Financial Officer, which is expected to have a material impact on the National Archives’ financial statements for future reporting period(s):

Taxation

The National Archives 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:

• where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
• for receivables and payables.

Events After the Reporting Period

There was no subsequent event that had the potential to significantly affect the ongoing structure or financial activities of the Archives.

Financial performance

This section analyses the financial performance of the National Archives for the year ended 30 June 2019.

1.1 Expenses

Significant Accounting Policy
Operating lease payments for leases with fixed increases are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

1.2: Own-source revenue and gains

Significant Accounting Policy

Sale of goods
Revenue from the sale of goods is recognised when:

a) the risks and rewards of ownership have been transferred to the buyer
b) the entity retains no managerial involvement or effective control over the goods.

Rendering of services
Revenue from the rendering of services is recognised by reference to the stage of completion of contracts at the reporting date, which is determined by the proportion that costs incurred to date bear to the estimated total costs of the transaction.

The National Archives collects official Commonwealth government records, and the personal records of governors-general, prime ministers, ministers, federal and High Court judges and some senior Commonwealth public servants. Our collection grows through the transfer of records from the custody of government agencies and Commonwealth persons into the National Archives. Once the records have been transferred into the Archives’ custody, they are recognised as revenue received free of charge at fair value as assessed by an independent valuer.

Significant Accounting Policy

Resources Received Free of Charge
Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as revenue at their fair value when the asset qualifies for recognition, unless received from another Government agency or authority as a consequence of a restructuring of administrative arrangements.

Financial position

This section analyses the National Archives' assets used to conduct its operations and the operating liabilties incurred as a result. Employee related information is disclosed in the People and Relationship section.

2.1 Financial Assets

Accounting Policy

Financial assets
Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

Effective Interest Rate Method
The effective interest method is a method of calculating the amortised cost of a financial asset or liability and of allocating interest expense/income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts/payments through the expected life of the financial asset/liability, or, where appropriate, a shorter period.

Impairment of Financial Assets
Financial assets are assessed for impairment at the end of each reporting period. Allowances are made when collectability of the debt is no longer possible.

Impairment of financial assets are based on an assessment of expected credit losses. Expected credit losses are measured in a way that reflects:

• an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes
• the time value of money
• reasonable and supportable information that is available without undue effort or cost at reporting date about past events, current conditions and forecasts of future economic conditions.

The carrying amount of financial assets is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.

Adoption of AASB 9
As the National Archives is a Tier 2 reporting entity, there will be no major changes as a result of the adoption of AASB9. Balance sheet items currently classified as Loans and Receivables will be classified as Amortised Cost under AASB 9.

2.2 Non-Financial Assets

Accounting Policy

Asset Recognition Threshold
Asset purchases are recognised initially at cost in the statement of financial position with an asset recognition threshold for Information Technology (IT) equipment of $1,000 (exc. GST) and a threshold of $2,000 (exc. GST) for all other assets. Where the cost of purchasing IT equipment and other assets is below the respective threshold, the amount is expensed in the year of acquisition (other than where they form part of a group of similar items which 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. This is particularly relevant to 'make good' provisions in property leases taken up by the National Archives where there exists an obligation to restore the premises to its original condition. These costs are included in the value of the National Archives' plant and equipment with a corresponding provision for the 'make good' recognised. (Refer to the provision for restoration obligations in note 2.4).

Revaluations
Following initial recognition at cost, heritage and cultural and plant and equipment assets are carried at fair value. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets' fair values as at the reporting date. The regularity of independent valuations depends 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 reverses 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 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 is restated to the revalued amount.

Depreciation and Amortisation
Depreciable property, plant and equipment assets and intangibles (excluding the digital collection in other intangibles assets) are written-off to their estimated residual values over their estimated useful lives to the Archives using, in all cases, the straight-line method of depreciation.

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

Impairment
All assets were assessed for impairment at 30 June 2019. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment loss recognised if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell 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 National Archives were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition
Non-financial assets are derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Heritage and Cultural Assets
The national archival collection includes records in a wide variety of media including files and card records, account books and ledgers, architectural models, photographs, films and video tapes, optical disks and computer tapes. High value records are stored in specially designed temperature and humidity controlled environments (where required).

Curatorial and preservation policies for heritage and cultural assets can be accessed at: http://www.naa.gov.au/about-us/organisation/op-policies.aspx

Intangibles
The National Archives' intangibles comprise internally developed software for internal use, purchases of licensed software and a digitised collection that is both internally and externally digitised.

Significant accounting estimates and judgements
The fair value of plant and equipment has been taken to be the depreciated replacement cost or market value of similar assets as assessed by an independent valuer every three years.

The fair value of heritage and cultural assets is based on market observations as assessed by an independent valuer every three years. The Archival Collection is diverse with many objects being iconic with limited markets for comparison. Values for the sample are determined by reference to the archival materials markets. The National Archives has made significant estimates in measuring the impact of providence to the value of collection objects. A sampling methodology is adopted for some collection categories whereby a sample of objects is selected from each collection category and an average value applied to the entire collection category. Furthermore some collection categories are valued with reference to the value by shelf metre or file size.

Effective 1 July 2012 the intangible digital collections are not amortised as their useful lives have been determined as indefinite. The useful lives of these collections are reviewed annually to determine whether events and circumstances continue to support an indefinite useful life assessment for that collection.

2.2: Reconciliation of the opening and closing balances of heritage and cultural, plant and equipment and intangibles

Indicators of impairment were found for heritage and cultural assets due to the transfer of records back to agencies during 2018-19. An annual assessment was undertaken internally to determine whether there are any indicators of impairment for heritage and cultural, plant and equipment and intangibles assets.

No intangibles assets are expected to be sold or disposed of within the next 12 months.

Revaluations of non-financial assets
On 30 June 2019, an independent valuer conducted a valuation of the property, plant and equipment asset class.

A revaluation increment of $10,392,214 for property, plant and equipment assets (2018: nil), was credited to the asset revaluation surplus by asset class and included in the equity section of the Statement of Financial Position. No decrements or increments were expensed (2018: nil).

No revaluation has been undertaken for heritage and cultural asset, therefore the increment for heritage and cultural asset was nil in 2019 (2018: $31m).

All revaluations were conducted in accordance with the revaluation policy.

Contractual commitments for the acquisition of property, plant, equipment and intangible assets
As at 30 June 2019, the Archives has contractual commitments for acquisition of software assets of $360,000, and acquisition of property, plant, equipment assets of $4,534,000.

2.3: Payables

Accounting Policy
Suppliers and other payables are initially measured at fair value net of transaction costs and subsequently at amortised cost by using the Effective Interest Rate Method.

2.4: Other Provisions

Accounting Policy
Restoration provisions are recognised when the National Archives has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be incurred to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Restoration provisions are discounted using the government bond rate that reflects the risks specific to the liability. The increase in the provisions due to the passage of time (unwinding the discount) is recognised as a finance cost.

As the restoration provisions relate to assets at fair value, any increment/decrement from changes in the estimate of costs required to remediate is recognised in other comprehensive income except to the extent that it reverses an increment/decrement previously recognised in profit or loss.

The National Archives currently has 2 (2018: 11) agreements for the leasing of premises which have provisions requiring us to restore the premises to their original condition at the conclusion of the lease. The National Archives has made a provision to reflect the present value of this obligation.

Accounting Judgements and Estimates
The National Archives has made an estimate of the cost to make good or remediate its storage and accommodation premises to bring them back to the condition and orientation they were prior to occupancy by the National Archives. The make good provision is informed by independent valuation and was assessed on 30 June 2019 by a qualified independent valuer (Jones Lang LaSalle Advisory Services Pty Ltd).

Funding

This section identifies the National Archives' funding structure.

3.1: Appropriations

3.1A: Annual Appropriations ('Recoverable GST exclusive')

Annual Appropriations for 2019

Significant 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 entity 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.

Annual Appropriations for 2018

People and relationships

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

4.1: Employee Provisions

Accounting policy
Liabilities for annual leave and long service leave expected to be settled within twelve months are measured at their nominal amounts.

Leave liabilities expected to be settled after twelve months are measured at the present value of the estimated future cash outflow.

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 National Archive'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 using present value techniques in accordance with the shorthand method as per FRR 24.1(a) as at 30 June 2019. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

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

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 Archives makes employer contributions to the employees' defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The Archives accounts for the contributions as if they were contributions to defined contribution plans. The liability for superannuation recognised as at 30 June 2019 represents outstanding contributions and is recognised in other payables.

4.2: Key Management Personnel Remuneration

The total number of key management personnel that are included in the above table are 8 (2018: 6).

Key Management Personnel
Key management personnel are those persons who have authority and responsibilities for planning, directing and controlling the activities of the National Archives directly or indirectly. The National Archives has determined the key management personnel to be the Executive Leadership Team and Portfolio Minister.

The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the entity.

4.3: Related Party Disclosures

Related party relationships:
The National Archives of Australia is an Australian Government controlled entity. Related parties to the Archives are Key Management Personnel reported at 4.2, and also the Portfolio Minister and other Australian Government Entities.

Transactions with related parties:
Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include exhibition entry fees, Archival record services and donations. These transactions have not been separately disclosed in this note.

Significant transactions with related parties can include:

• the payments of grants or loans
• purchases of goods and services
• asset purchases, sales transfers or leases
• debts forgiven
• guarantees.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the Archives, it has been determined that there are no related party transactions to be separately disclosed.