For the period ended 30 June 2019
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 (PGPA Act).
The financial statements have been prepared in accordance with:
- Australian Accounting Standards and Interpretations - Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period; and
- Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR).
The Financial Statements are prepared in Australian dollars and rounded to the nearest thousand dollar ($’000).
The Financial Statements have been prepared on an accrual basis and in accordance with the historical cost convention. No allowance is made for the effects of changing prices on the results or the financial position.
New accounting standards
No accounting standard has been adopted earlier than the application date as stated in the standard.
The adoption of new standards and amendments that came into effect for this financial year did not have a significant financial impact on the Financial Statements. The major standards that came into effect this year were AASB 9 - Financial Instruments and AASB 15 - Revenue from contracts with customer, both new standards had no impact on NAIF financial statements.
A number of new and revised Australian accounting standards apply to financial statements in later years. The most significant is AASB 16 - Leases which has an effective date from 1st July 2019. Based on current leases this will not have a significant impact on the Financial Statements.
NAIF is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and Goods and Services Tax (GST).
Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for:
- items of property with a project cost less than $15,000 (which are expensed in the year of acquisition): and
- items of plant and equipment costing less than $7,500 (which are expensed in the year of acquisition).
Liabilities for short-term employee benefits expected 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.
The liability for employee benefits includes provision for annual leave and long service 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 entity’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 shorthand method, and with management assessments relating to salary growth rates. The estimate of the present value of the liability takes into account an estimate of attrition rates and pay increases through promotions and inflation.
No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave estimated to be taken in the future by NAIF employees is less than the annual entitlement for sick leave.
NAIF’s employees are members of superannuation funds held outside the Australian Government. NAIF makes employer contributions to these funds as per the Superannuation Guarantee Contribution rate. The liability for superannuation recognised as at 30 June 2019 represents outstanding contributions.
Events after the reporting period
There were no significant events occurring after the reporting period that impact the NAIF’s Financial Statements for the year ending 30 June 2019.
Budget variance commentary
The variance in this commentary is the difference between the financial statements and the original budget presented to Parliament in the 2018-19 Portfolio Additional Estimates.
Budget figures assumed all of the underspend of $2,398k would be spent in the 2017-18 financial year, whereas an amount of $2,109k was rolled into the 2018-19 financial year and of this only $477k was spent leaving a remaining surplus of $1,632k. The underspend is due to timing differences associated with recruitment and related activities. Budget figures assumed a number of employees being supplemented by contractors, during the year contractors were replaced by permanent employees and this reflects the increase in employees benefits which is offset by a corresponding decrease in suppliers.