Contents

Auditor-General’s Report on Financial Statements

Certification of Financial Statements

Contents

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Cash Flow Statement

Notes to and forming part of the Financial Statements

Auditor-General's Report on Financial Statements

Independent Auditor's Report

Certification of Financial Statements

Certification of Financial Statements

Contents

Statement of Comprehensive Income

The above statement should be read in conjunction with the accompanying notes.

Statement of Financial Position

The above statement should be read in conjunction with the accompanying notes.

Statement of Changes in Equity

The above statement should be read in conjunction with the accompanying notes.

¹Transfer of asset revaluation reserve for office fitout relating to the vacated Barton office.

Accounting Policy Equity Injections Departmental Capital Budgets (DCBs) are recognised directly in Contributed Equity in that year.

Cash Flow Statement

The above statement should be read in conjunction with the accompanying notes.

Notes to and Forming Part of the Financial Statements for the year ended 30 June 2019

OVERVIEW

1 Basis of Preparation of the Financial Statements

The Financial Statements and notes 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; and
• Australian Accounting Standards and Interpretations 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 are in accordance with the historical cost convention, except for certain assets 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 unless otherwise specified.

2 New Australian Accounting Standards

Adoption of new Australian Accounting Standard requirements

All new standards, any amendments to standards and interpretations that have been issued and are applicable to the current reporting period have been reviewed and have no effect on the entity’s financial statements.

Future Australian Accounting Standard requirements

The following new standard has been issued and is applicable to future reporting periods and may have a material effect on the entity’s financial statements.

3 Contingent Liabilities and Contingent Assets

OPC has no quantifiable or unquantifiable contingent assets or liabilities as at 30 June 2019.

4 Taxation

OPC 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 except for receivables and payables.

5 Events after the Reporting Date

There is no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the entity.

BUDGET VARIANCE EXPLANATIONS

OPC delivers drafting and advisory services for Bills and subordinate legislation, prepares compilations of laws as amended and registers laws and instruments on behalf of more than 70 Commonwealth entities.

OPC’s drafting work is regulated by the Legal Services Directions. All Bill and regulation drafting is tied to OPC and budget funded. OPC delivers legislative publishing services to and on behalf of the whole of the Australian Government through the Federal Register of Legislation (the Legislation Register).

OPC recovers the cost of core services from Government entities that publish legislation on the Legislation Register through annual fees.

OPC provides drafting services for legislative instruments and other publishing services on a fee for service basis. The demand for these services is client driven and therefore difficult to budget accurately.

The following is an explanation of the major variances between the original budget presented in the 2018-19 Portfolio Budget Statements and the 2018-19 final outcome as presented in accordance with Australian Accounting Standards for OPC.

Variances are considered to be major if the variance is greater than 10% between budget and actual.

Statement of Financial Position

Trade and other receivables

Actual trade and other receivables was higher than budget mainly due to higher appropriations receivable due to unbudgeted surplus for the 2017-18 year ($1.512 million) and the 2018-19 year ($1.087 million).

Buildings - leasehold improvements

Actual buildings - leasehold improvements was higher than budget mainly due to the revaluation of assets.

Other payables- unearned income

Actual unearned income was higher than budget mainly due to receipts ($2.098 million) for the Legislation Register 2019-20 annual fees that were invoiced in May 2019.

Employee provisions

Actual employee provisions was higher than budget due to an increase in the provision for long service leave (LSL) as a result of the continuing fall in the long term bond rate and static salary growth rate, resulting in a higher discount factor being applied to the LSL calculation.

Cash Flow Statement

Operating Activities - Sales of goods and rendering of services

The actual sales of goods and rendering of services is higher than budget due to cash received ($2.098 million) for the Legislation Register 2019-20 annual fees.

Operating Activities - Net GST received

The actual net GST received is higher than budget due to higher than expected supplier expenses and capitalised contractor costs for the redevelopment of the Legislation Register.

Operating Activities - Employees

The actuals are lower than budget due to lower than expected employee benefits.

Operating Activities - Section 74 receipts transferred to the Official Public Account

The actuals are higher than budget due to higher than expected cash received for the Legislation Register 2019-20 annual fees.

Investing Activities - Purchase of leasehold improvements, plant and equipment

The actuals are higher than budget due to unbudgeted minor fit-out works to OPC’s premises.

1. FINANCIAL PERFORMANCE

Accounting Policy Leases Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the leased assets.

Accounting Policy Sale of goods Revenue from the sale of goods is recognised when the risks and rewards of ownership have passed to the buyer and the costs incurred can be reliably measured. Risk and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer. Rendering of services Revenue is recognised when OPC has the right to be compensated for services performed and the stage of completion can be reliably measured. It is recorded at the amount likely to be received for the provision of that service.

Accounting Policy Other Revenue 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.

Accounting Policy Revenue from Government Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as revenue when OPC gains control of the appropriation.

2. FINANCIAL POSITION

Accounting Policy Cash Cash is recognised at its nominal amount. Goods and services receivable Receivables for goods and services are recognised at the nominal amounts due less any impairment allowance account. Credit terms are 30 days. Collectability of debts is reviewed at balance date and an allowance is made when collectability of the debt is no longer probable. Appropriations receivable Appropriations receivable are appropriations controlled by OPC but held in the Official Public Account under the Government's just-in-time draw down arrangements. Appropriations receivable are recognised at their nominal amounts.

Accounting Policy

Asset Recognition Threshold

Purchases of leasehold improvements, plant and equipment, and intangibles 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 which are significant in total).

Derecognition

All items of leasehold improvements, plant and equipment, and intangibles are derecognised upon disposal or when no further future economic benefits are expected from their use.

Revaluations

See Accounting Policy in Note 5.2A.

Impairment

All leasehold improvements, plant and equipment, and intangibles were assessed for impairment at 30 June 2019. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

No indicators of impairment were identified for leasehold improvements, plant and equipment, and intangibles.

Leasehold improvements, plant and equipment

Depreciation

Depreciable leasehold improvements, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to OPC 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:

Intangibles

Intangibles are carried at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Intangibles are amortised on a straight-line basis over their anticipated useful life.

The useful life of OPC’s intangibles are as follows:

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

¹ Settlement is usually made in 30 days.

² Settlement will be made progressively until the end of the office lease in 2025.

Accounting Policy Accounting policies for employee payables are contained in the People and relationships section.

3. FUNDING

¹The 2018 annual appropriation was reduced by $46,000. A formal determination was made on 26 June 2018.

²The variance is mainly due to the surplus for the year after adding back non-cost recovered depreciation, offset by the use of prior year departmental appropriation for the Legislation Register redevelopment.

4. PEOPLE AND RELATIONSHIPS

Accounting Policy

Employee provisions

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits expected within twelve months of the end of the 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.

Long-term employee benefits are measured at total net present value of the defined benefit obligation at the end of the reporting period.

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 OPC 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 OPC'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 paragraph 24(a) of the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 using the shorthand method. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. OPC recognises a provision for termination when it has developed a detailed formal plan for terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

Staff of OPC are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or a complying fund chosen by the employee.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and other funds are defined contribution schemes.

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. OPC makes employer contributions to the employees’ defined benefits superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. OPC 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 for the final fortnight of the year.

Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly. OPC has determined the Key Management Personnel to be the First Parliamentary Counsel, the two Second Parliamentary Counsel, the General Manager Corporate and Chief Information Officer, the General Manager Corporate Services, and the General Manager Publications. Key management personnel remuneration is reported in the table below:

The total number of Key Management Personnel that are included in the above table are 6 full-time employees.

¹Includes salary, annual leave, performance bonuses, motor vehicle allowances and SES experience loading.

²Includes superannuation.

³Includes long service leave.

The 2018 figures have been re-calculated to be consistent with the 2019 disclosure requirements.

Related party relationships:

OPC is an Australian Government controlled entity. Related parties to this entity are Key Management Personnel.

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 the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

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

5. MANAGING UNCERTAINTIES

Accounting Policy

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, OPC reclassified financial assets from ‘Loans and receivables’ to ‘Financial assets measured at amortised cost’.

Trade receivables are recorded at face value less any impairment and are recognised when OPC becomes party to a contract and has a legal right to receive cash. Trade receivables are derecognised on payment.

Financial assets at amortised cost are assessed for impairment at the end of each reporting period. Allowances are made when collectability of the debt is no longer probable. Comparatives have not been restated on initial application.

Financial Liabilities

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced). Supplier and other payables are derecognised on payment.

¹OPC's assets are held for operational purposes and not held for the purposes of deriving a profit.

Accounting Policy

Fair Value Measurement

OPC deems transfers between levels of the fair value hierarchy to have occurred at the end of each reporting period.

Revaluations

All leasehold improvements, plant and equipment are measured at fair value in the Statement of Financial Position.

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 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.

Each year, a review of the carrying amounts of assets is conducted. Where it is considered that the carrying amount of an asset at the date of reporting would materially differ from the fair value, an independent valuation is recommended. All leasehold improvements, plant and equipment is subject to a formal valuation at least once every three years.

An independent desktop valuation was undertaken in 2018-19 by AON Australia.

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 through operating result. Revaluation decrements for a class of assets are recognised directly through operating result 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.

A reconciliation of movements and impact of the valuation on leasehold improvements and plant and equipment has been included in Note 2.2A.

The net fair values of the financial assets and liabilities are at their carrying amounts. OPC derive no interest income from financial assets in either the current or prior year.

6. OTHER INFORMATION